Exhibit 99.1
 Report of Independent Registered Public Accounting Firm
    
    Huntington Bancshares Incorporated
 
 
    Internal Control  Integrated Framework
 
 82




---



##### 



Consolidated Balance Sheets
    
    Huntington Bancshares Incorporated
 December 31,(in thousands, except number of shares)
    
    2008
    
    
    2007AssetsCash and due from banks
    
    $
    806,693
    
    
    $
    1,416,597Federal funds sold and securities purchased under resale agreements
    
    
    37,975
    
    
    
    592,649Interest bearing deposits in banks
    
    
    292,561
    
    
    
    340,090Trading account securities
    
    
    88,677
    
    
    
    1,032,745Loans held for sale
    
    
    390,438
    
    
    
    494,379Investment securities
    
    
    4,384,457
    
    
    
    4,500,171Loans and leases:Commercial and industrial loans and leases
    
    
    13,540,841
    
    
    
    13,125,565Commercial real estate loans
    
    
    10,098,210
    
    
    
    9,183,052Automobile loans
    
    
    3,900,893
    
    
    
    3,114,029Automobile leases
    
    
    563,417
    
    
    
    1,179,505Home equity loans
    
    
    7,556,428
    
    
    
    7,290,063Residential mortgage loans
    
    
    4,761,384
    
    
    
    5,447,126Other consumer loans
    
    
    670,992
    
    
    
    714,998Loans and leases
    
    
    41,092,165
    
    
    
    40,054,338Allowance for loan and lease losses
    
    
    (900,227
    )
    
    
    (578,442
    )Net loans and leases
    
    
    40,191,938
    
    
    
    39,475,896Bank owned life insurance
    
    
    1,364,466
    
    
    
    1,313,281Premises and equipment
    
    
    519,500
    
    
    
    557,565Goodwill
    
    
    3,054,985
    
    
    
    3,059,333Other intangible assets
    
    
    356,703
    
    
    
    427,970Accrued income and other assets
    
    
    2,864,466
    
    
    
    1,486,792Total assets
    
    $
    54,352,859
    
    
    $
    54,697,468Liabilities and shareholders equityLiabilitiesDeposits in domestic officesDemand deposits  non-interest bearing
    
    $
    5,477,439
    
    
    $
    5,371,747Interest bearing
    
    
    31,732,842
    
    
    
    31,644,460Deposits in foreign offices
    
    
    733,005
    
    
    
    726,714Deposits
    
    
    37,943,286
    
    
    
    37,742,921Short-term borrowings
    
    
    1,309,157
    
    
    
    2,843,638Federal Home Loan Bank advances
    
    
    2,588,976
    
    
    
    3,083,555Other long-term debt
    
    
    2,331,632
    
    
    
    1,937,078Subordinated notes
    
    
    1,950,097
    
    
    
    1,934,276Accrued expenses and other liabilities
    
    
    1,002,570
    
    
    
    1,206,860Total liabilities
    
    
    47,125,718
    
    
    
    48,748,328Shareholders equityPreferred 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; 1,398,071 shares issued and outstanding
    
    
    1,308,667
    
    
    
    8.50% Series A Non-cumulative Perpetual Convertible Preferred Stock, par value
and liquidiation value per
share of $1,000; 569,000 shares issued and outstanding
    
    
    569,000
    
    
    
    Common stock Par value of $0.01 and authorized 1,000,000,000 shares; issued 366,972,250 and
367,000,815 shares, respectively;
outstanding 366,057,669 and 366,261,676 shares respectively
    
    
    3,670
    
    
    
    3,670Capital surplus
    
    
    5,322,428
    
    
    
    5,237,783Less 914,581 and 739,139 treasury shares, at cost
    
    
    (15,530
    )
    
    
    (14,391
    )Accumulated other comprehensive loss:Unrealized losses on investment securities
    
    
    (207,756
    )
    
    
    (10,011
    )Unrealized gains on cash flow hedging derivatives
    
    
    44,638
    
    
    
    4,553Pension and other postretirement benefit adjustments
    
    
    (163,575
    )
    
    
    (44,153
    )Retained earnings
    
    
    365,599
    
    
    
    771,689Total shareholders equity
    
    
    7,227,141
    
    
    
    5,949,140Total liabilities and shareholders equity
    
    $
    54,352,859
    
    
    $
    54,697,468
 See Notes to Consolidated Financial Statements
 83




---



##### 



Consolidated Statements of Income
    
    Huntington Bancshares Incorporated
 Year Ended December 31,(in thousands, except per share amounts)
    
    2008
    
    
    2007
    
    
    2006Interest and fee incomeLoans and leasesTaxable
    
    $
    2,447,362
    
    
    $
    2,388,799
    
    
    $
    1,775,445Tax-exempt
    
    
    2,748
    
    
    
    5,213
    
    
    
    2,154Investment securitiesTaxable
    
    
    217,882
    
    
    
    221,877
    
    
    
    231,294Tax-exempt
    
    
    29,869
    
    
    
    26,920
    
    
    
    23,901Other
    
    
    100,461
    
    
    
    100,154
    
    
    
    37,725Total interest income
    
    
    2,798,322
    
    
    
    2,742,963
    
    
    
    2,070,519Interest expenseDeposits
    
    
    931,679
    
    
    
    1,026,388
    
    
    
    717,167Short-term borrowings
    
    
    42,261
    
    
    
    92,810
    
    
    
    72,222Federal Home Loan Bank advances
    
    
    107,848
    
    
    
    102,646
    
    
    
    60,016Subordinated notes and other long-term debt
    
    
    184,843
    
    
    
    219,607
    
    
    
    201,937Total interest expense
    
    
    1,266,631
    
    
    
    1,441,451
    
    
    
    1,051,342Net interest income
    
    
    1,531,691
    
    
    
    1,301,512
    
    
    
    1,019,177Provision for credit losses
    
    
    1,057,463
    
    
    
    643,628
    
    
    
    65,191Net interest income after provision for credit losses
    
    
    474,228
    
    
    
    657,884
    
    
    
    953,986Service charges on deposit accounts
    
    
    308,053
    
    
    
    254,193
    
    
    
    185,713Brokerage and insurance income
    
    
    137,796
    
    
    
    92,375
    
    
    
    58,835Trust services
    
    
    125,980
    
    
    
    121,418
    
    
    
    89,955Electronic banking
    
    
    90,267
    
    
    
    71,067
    
    
    
    51,354Bank owned life insurance income
    
    
    54,776
    
    
    
    49,855
    
    
    
    43,775Automobile operating lease income
    
    
    39,851
    
    
    
    7,810
    
    
    
    43,115Mortgage banking income
    
    
    8,994
    
    
    
    29,804
    
    
    
    41,491Securities (losses), net
    
    
    (197,370
    )
    
    
    (29,738
    )
    
    
    (73,191
    )Other income
    
    
    138,791
    
    
    
    79,819
    
    
    
    120,022Total non-interest income
    
    
    707,138
    
    
    
    676,603
    
    
    
    561,069Personnel costs
    
    
    783,546
    
    
    
    686,828
    
    
    
    541,228Outside data processing and other services
    
    
    128,163
    
    
    
    127,245
    
    
    
    78,779Net occupancy
    
    
    108,428
    
    
    
    99,373
    
    
    
    71,281Equipment
    
    
    93,965
    
    
    
    81,482
    
    
    
    69,912Amortization of intangibles
    
    
    76,894
    
    
    
    45,151
    
    
    
    9,962Professional services
    
    
    53,667
    
    
    
    40,320
    
    
    
    27,053Marketing
    
    
    32,664
    
    
    
    46,043
    
    
    
    31,728Automobile operating lease expense
    
    
    31,282
    
    
    
    5,161
    
    
    
    31,286Telecommunications
    
    
    25,008
    
    
    
    24,502
    
    
    
    19,252Printing and supplies
    
    
    18,870
    
    
    
    18,251
    
    
    
    13,864Other expense
    
    
    124,887
    
    
    
    137,488
    
    
    
    106,649Total non-interest expense
    
    
    1,477,374
    
    
    
    1,311,844
    
    
    
    1,000,994(Loss) income before income taxes
    
    
    (296,008
    )
    
    
    22,643
    
    
    
    514,061(Benefit) provision for income taxes
    
    
    (182,202
    )
    
    
    (52,526
    )
    
    
    52,840Net (loss) income
    
    $
    (113,806
    )
    
    $
    75,169
    
    
    $
    461,221Dividends on preferred shares
    
    
    46,400
    
    
    
    
    
    
    
    Net (loss) income applicable to common shares
    
    $
    (160,206
    )
    
    $
    75,169
    
    
    $
    461,221Average common shares  basic
    
    
    366,155
    
    
    
    300,908
    
    
    
    236,699Average common shares  diluted
    
    
    366,155
    
    
    
    303,455
    
    
    
    239,920Per common shareNet (loss) income  basic
    
    $
    (0.44
    )
    
    $
    0.25
    
    
    $
    1.95Net (loss) income  diluted
    
    
    (0.44
    )
    
    
    0.25
    
    
    
    1.92Cash dividends declared on common stock
    
    
    0.6625
    
    
    
    1.0600
    
    
    
    1.0000
 See Notes to Consolidated Financial Statements
 84




---



##### 



Consolidated Statements of Changes in Shareholders Equity
    
    Huntington Bancshares Incorporated
 AccumulatedPreferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OtherSeries B
    
    
    Series A
    
    
    Common Stock
    
    
    Capital
    
    
    Treasury Stock
    
    
    Comprehensive
    
    
    Retained(in thousands)
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Surplus
    
    
    Shares
    
    
    Amount
    
    
    Loss
    
    
    Earnings
    
    
    TotalBalance  January 1, 2006
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    224,682
    
    
    $
    1,808,130
    
    
    $
    
    
    
    
    (576
    )
    
    $
    (10,380
    )
    
    $
    (22,093
    )
    
    $
    781,844
    
    
    $
    2,557,501Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    461,221
    
    
    
    461,221Unrealized net gains on investment securities arising
during the period, net of reclassification(1) for net
realized losses, net of tax of $(26,369)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,270
    
    
    
    
    
    
    
    48,270Unrealized gains on cash flow hedging derivatives,
net of tax of ( $970)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,802
    
    
    
    
    
    
    
    1,802Minimum pension liability adjustment, net of tax of
($145)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    269
    
    
    
    
    
    
    
    269Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    511,562Cumulative effect of change in accounting principle
for servicing financial assets, net of tax of $6,521
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,110
    
    
    
    12,110Cumulative effect of change in accounting for
funded status of pension plans, net of tax of $44,861
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (83,314
    )
    
    
    
    
    
    
    (83,314
    )Cash dividends declared ( $1.00 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (239,406
    )
    
    
    (239,406
    )Shares issued pursuant to acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,350
    
    
    
    575,756
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    575,756Recognition of the fair value of share-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,574
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,574Treasury shares purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,981
    )
    
    
    (378,835
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (378,835
    )Other share-based compensation activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,013
    
    
    
    40,829
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,829Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    310
    
    
    
    
    
    
    
    (14
    )
    
    
    (761
    )
    
    
    
    
    
    
    
    
    
    
    (451
    )Balance  December 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    236,064
    
    
    
    2,064,764
    
    
    
    
    
    
    
    (590
    )
    
    
    (11,141
    )
    
    
    (55,066
    )
    
    
    1,015,769
    
    
    
    3,014,326Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,169
    
    
    
    75,169Unrealized net losses on investment securities arising
during the period, net of reclassification(1) for net
realized losses, net of tax of $13,245
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,265
    )
    
    
    
    
    
    
    (24,265
    )Unrealized losses on cash flow hedging derivatives,
net of tax of $6,707
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,455
    )
    
    
    
    
    
    
    (12,455
    )Change in accumulated unrealized losses for pension
and other post-retirement obligations, net of tax of
($22,710)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,175
    
    
    
    
    
    
    
    42,175Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,624Assignment of $0.01 par value per share for each
share of Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,062,403
    )
    
    
    2,062,403
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash dividends declared ( $1.06 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (319,249
    )
    
    
    (319,249
    )Shares issued pursuant to acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    129,827
    
    
    
    1,298
    
    
    
    3,135,239
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,136,537Recognition of the fair value of share-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,836
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,836Other share-based compensation activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,111
    
    
    
    11
    
    
    
    15,943
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,954Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,362
    
    
    
    (150
    )
    
    
    (3,250
    )
    
    
    
    
    
    
    
    
    
    
    (888
    )Balance  December 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    367,002
    
    
    
    3,670
    
    
    
    5,237,783
    
    
    
    (740
    )
    
    
    (14,391
    )
    
    
    (49,611
    )
    
    
    771,689
    
    
    
    5,949,140Cumulative effect of change in accounting
principle for fair value of assets and libilities,
net of tax of ( $803)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,491
    
    
    
    1,491Cumulative effect of changing measurement date
date provisions for pension and post-retirement
assets and obligations, net of tax of $4,570
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,834
    )
    
    
    (4,654
    )
    
    
    (8,488
    )Balance, beginning of period  as adjusted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    367,002
    
    
    
    3,670
    
    
    
    5,237,783
    
    
    
    (740
    )
    
    
    (14,391
    )
    
    
    (53,445
    )
    
    
    768,526
    
    
    
    5,942,143Comprehensive Loss:Net (loss) income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (113,806
    )
    
    
    (113,806
    )Unrealized net losses on investment securities
arising during the period, net of
reclassification(1) for net realized losses, net of
tax of $108,131
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (197,745
    )
    
    
    
    
    
    
    (197,745
    )Unrealized gains on cash flow hedging
derivatives, net of tax of ( $21,550)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,021
    
    
    
    
    
    
    
    40,021Change in accumulated unrealized losses for
pension and other post-retirement obligations,
net of tax of $62,240
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (115,588
    )
    
    
    
    
    
    
    (115,588
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (387,118
    )Issuance of Preferred Class B stock
    
    
    1,398
    
    
    
    1,306,726
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,306,726Issuance of Preferred Class A stock
    
    
    
    
    
    
    
    
    
    
    569
    
    
    
    569,000
    
    
    
    
    
    
    
    
    
    
    
    (18,866
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    550,134Issuance of warrants convertible to common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,765
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,765Amortization of discount
    
    
    
    
    
    
    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 Class A ($62.097 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,333
    )
    
    
    (35,333
    )Recognition of the fair value of share-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,091
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,091Other share-based compensation activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30
    )
    
    
    
    
    
    
    (874
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (199
    )
    
    
    (1,073
    )Other(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (471
    )
    
    
    (175
    )
    
    
    (1,139
    )
    
    
    64
    
    
    
    
    
    
    
    (1,546
    )Balance  December 31, 2008
    
    
    1,398
    
    
    $
    1,308,667
    
    
    
    569
    
    
    $
    569,000
    
    
    
    366,972
    
    
    $
    3,670
    
    
    $
    5,322,428
    
    
    
    (915
    )
    
    $
    (15,530
    )
    
    $
    (326,693
    )
    
    $
    365,599
    
    
    $
    7,227,141
 
 (1)
    
    Reclassification adjustments represent net unrealized gains or losses as of December 31 of the
prior year on investment securities that were sold during the current year. For the years ended
December 31, 2008, 2007, and 2006 the reclassification adjustments were $128,290, net of tax of
($69,080), $19,330, net of tax of ($10,408), and $47,574, net of tax of ($25,617), respectively.(2)
    
    Primarily represents net share activity for amounts held in deferred compensation plans. See Notes to Consolidated Financial Statements.
 85




---



##### 



Consolidated Statements of Cash Flows
    
    Huntington Bancshares Incorporated
 Year Ended December 31,(in thousands)
    
    2008
    
    
    2007
    
    
    2006Operating activitiesNet (loss) income
    
    $
    (113,806
    )
    
    $
    75,169
    
    
    $
    461,221Adjustments to reconcile net (loss) income to net cash provided by (used for) operating
activities:Provision for credit losses
    
    
    1,057,463
    
    
    
    643,628
    
    
    
    65,191Losses on investment securities
    
    
    197,370
    
    
    
    29,738
    
    
    
    73,191Depreciation and amortization
    
    
    244,860
    
    
    
    127,261
    
    
    
    111,649Change in current and deferred income taxes
    
    
    (251,827
    )
    
    
    (157,169
    )
    
    
    (357,458
    )Net decrease (increase) in trading account securities
    
    
    92,976
    
    
    
    (996,689
    )
    
    
    24,784Originations of loans held for sale
    
    
    (3,063,375
    )
    
    
    (2,815,854
    )
    
    
    (2,537,999
    )Principal payments on and proceeds from loans held for sale
    
    
    3,096,129
    
    
    
    2,693,132
    
    
    
    2,532,908Other, net
    
    
    (22,461
    )
    
    
    58,005
    
    
    
    (149,028
    )Net cash provided by (used for) operating activities
    
    
    1,237,329
    
    
    
    (342,779
    )
    
    
    224,459Investing activities
Increase in interest bearing deposits in banks
    
    
    (228,554
    )
    
    
    (188,971
    )
    
    
    (48,681
    )Net cash (paid) received in acquisitions
    
    
    
    
    
    
    (80,060
    )
    
    
    60,772Proceeds from:Maturities and calls of investment securities
    
    
    386,232
    
    
    
    405,482
    
    
    
    604,286Sales of investment securities
    
    
    555,719
    
    
    
    1,528,480
    
    
    
    2,829,529Purchases of investment securities
    
    
    (1,338,274
    )
    
    
    (1,317,630
    )
    
    
    (3,015,922
    )Proceeds from sales of loans
    
    
    471,362
    
    
    
    108,588
    
    
    
    245,635Net loan and lease originations, excluding sales
    
    
    (2,358,653
    )
    
    
    (1,746,814
    )
    
    
    (338,022
    )Purchases of operating lease assets
    
    
    (226,378
    )
    
    
    (76,940
    )
    
    
    (29,008
    )Proceeds from sale of operating lease assets
    
    
    25,091
    
    
    
    27,591
    
    
    
    128,666Purchases of premises and equipment
    
    
    (59,945
    )
    
    
    (109,450
    )
    
    
    (47,207
    )Proceeds from sales of other real estate
    
    
    54,520
    
    
    
    35,883
    
    
    
    14,392Other, net
    
    
    19,172
    
    
    
    8,471
    
    
    
    6,856Net cash (used for) provided by investing activities
    
    
    (2,699,708
    )
    
    
    (1,405,370
    )
    
    
    411,296Financing activitiesIncrease (decrease) in deposits
    
    
    195,142
    
    
    
    (165,625
    )
    
    
    936,766(Decrease) increase in short-term borrowings
    
    
    (1,316,155
    )
    
    
    1,464,542
    
    
    
    (292,211
    )Proceeds from issuance of subordinated notes
    
    
    
    
    
    
    250,010
    
    
    
    250,000Maturity/redemption of subordinated notes
    
    
    (76,659
    )
    
    
    (46,660
    )
    
    
    (4,080
    )Proceeds from Federal Home Loan Bank advances
    
    
    1,865,294
    
    
    
    2,853,120
    
    
    
    2,517,210Maturity/redemption of Federal Home Loan Bank advances
    
    
    (2,360,368
    )
    
    
    (1,492,899
    )
    
    
    (2,771,417
    )Proceeds from issuance of long-term debt
    
    
    887,111
    
    
    
    
    
    
    
    935,000Maturity of long-term debt
    
    
    (540,266
    )
    
    
    (353,079
    )
    
    
    (1,158,942
    )Net proceeds from issuance of preferred stock
    
    
    1,947,625
    
    
    
    
    
    
    
    Dividends paid on preferred stock
    
    
    (23,242
    )
    
    
    
    
    
    
    Dividends paid on common stock
    
    
    (279,608
    )
    
    
    (289,758
    )
    
    
    (231,117
    )Repurchases of common stock
    
    
    
    
    
    
    
    
    
    
    (378,835
    )Other, net
    
    
    (1,073
    )
    
    
    16,997
    
    
    
    41,842Net cash provided by (used for) financing activities
    
    
    297,801
    
    
    
    2,236,648
    
    
    
    (155,784
    )(Decrease) increase in cash and cash equivalents
    
    
    (1,164,578
    )
    
    
    488,499
    
    
    
    479,971Cash and cash equivalents at beginning of year
    
    
    2,009,246
    
    
    
    1,520,747
    
    
    
    1,040,776Cash and cash equivalents at end of year
    
    $
    844,668
    
    
    $
    2,009,246
    
    
    $
    1,520,747Supplemental disclosures:Income taxes paid
    
    $
    69,625
    
    
    $
    104,645
    
    
    $
    410,298Interest paid
    
    
    1,282,877
    
    
    
    1,434,007
    
    
    
    1,024,635Non-cash activitiesCommon stock dividends accrued, paid in subsequent year
    
    
    39,675
    
    
    
    76,762
    
    
    
    37,166Preferred stock dividends accrued, paid in subsequent year
    
    
    21,218
    
    
    
    
    
    
    
    Common stock and stock options issued for purchase acquisitions
    
    
    
    
    
    
    3,136,537
    
    
    
    575,756
 See Notes to Consolidated Financial Statements.
 86




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  
    
    Nature of Operations  Huntington Bancshares Incorporated (Huntington or The Company) is a
multi-state diversified financial holding company organized under Maryland law in 1966 and
headquartered in Columbus, Ohio. Through its subsidiaries, including its bank subsidiary, The
Huntington National Bank (the Bank), Huntington is engaged in providing full-service
commercial and consumer banking services, mortgage banking services, automobile financing,
equipment leasing, investment management, trust services, brokerage services, customized
insurance service programs, and other financial products and services. Huntingtons banking
offices are located in Ohio, Michigan, Pennsylvania, Indiana, West Virginia, and Kentucky.
Selected financial service activities are also conducted in other states including: Auto
Finance and Dealer Services offices in Arizona, Florida, Nevada, New Jersey, New York,
Tennessee, and Texas; Private Financial and Capital Markets Group offices in Florida; and
Mortgage Banking offices in Maryland and New Jersey. Huntington Insurance offers retail and
commercial insurance agency services in Ohio, Pennsylvania, Michigan, Indiana, and West
Virginia. International banking services are available through the headquarters office in
Columbus and a limited purpose office located in both the Cayman Islands and Hong Kong.
 
    
    Basis of Presentation  The consolidated financial statements include the accounts of
Huntington and its majority-owned subsidiaries and are presented in accordance with accounting
principles generally accepted in the United States (GAAP). All intercompany transactions and
balances have been eliminated in consolidation. Companies in which Huntington holds more than
a 50% voting equity interest or are a variable interest entity (VIE) in which Huntington
absorbs the majority of expected losses are consolidated. Huntington evaluates VIEs in which
it holds a beneficial interest for consolidation. VIEs, as defined by the Financial Accounting
Standards Board (FASB) Interpretation (FIN) No. 46 (Revised 2003), Consolidation of Variable
Interest Entities(FIN 46R), are legal entities with insubstantial equity, whose equity
investors lack the ability to make decisions about the entitys activities, or whose equity
investors do not have the right to receive the residual returns of the entity if they occur.
VIEs in which Huntington does not absorb the majority of expected losses are not consolidated.
For consolidated entities where Huntington holds less than a 100% interest, Huntington
recognizes a minority interest liability (included in accrued expenses and other liabilities)
for the equity held by others and minority interest expense (included in other long-term debt)
for the portion of the entitys earnings attributable to minority interests. Investments in
companies that are not consolidated are accounted for using the equity method when Huntington
has the ability to exert significant influence. Those investments in non-marketable securities
for which Huntington does not have the ability to exert significant influence are generally
accounted for using the cost method and are periodically evaluated for impairment. Investments
in private investment partnerships are carried at fair value. Investments in private
investment partnerships and investments that are accounted for under the equity method or the
cost method are included in accrued income and other assets and Huntingtons proportional
interest in the investments earnings are included in other non-interest income.The preparation of financial statements in conformity with GAAP requires Management to make
estimates and assumptions that significantly affect amounts reported in the financial statements.
Huntington uses significant estimates and employs the judgments of management in determining the
amount of its allowance for credit losses and income tax accruals and deferrals, in its fair value
measurements of investment securities, derivatives, mortgage loans held for sale, mortgage
servicing rights and in the evaluation of impairment of loans, goodwill, investment securities,
and fixed assets. As with any estimate, actual results could differ from those estimates.
Significant estimates are further discussed in the critical accounting policies included in
Managements Discussion and Analysis of Financial Condition and Results of Operations. Certain
prior period amounts have been reclassified to conform to the current years presentation.
 
    
    Securities  Securities purchased with the intention of recognizing short-term profits or
which are actively bought and sold are classified as trading account securities and reported
at fair value. The unrealized gains or losses on trading account securities are recorded in
other non-interest income, except for gains and losses on trading account securities used to
hedge the fair value of mortgage servicing rights, which are included in mortgage banking
income. All other securities are classified as investment securities. Investment securities
include securities designated as available for sale and non-marketable equity securities.
Unrealized gains or losses on investment securities designated as available for sale are reported
as a separate component of accumulated other comprehensive loss in the consolidated statement of
changes in shareholders equity. Declines in the value of debt and marketable equity securities
that are considered other-than-temporary are recorded in non-interest income as securities losses.Securities transactions are recognized on the trade date (the date the order to buy or sell is
executed). The amortized cost of sold securities is used to compute realized gains and losses.
Interest and dividends on securities, including amortization of premiums and accretion of
discounts using the effective interest method over the period to maturity, are included in
interest income.Non-marketable equity securities include holdings of Visa, Inc. Class B common stock and stock
acquired for regulatory purposes, such as Federal Home Loan Bank stock and Federal Reserve Bank
stock. These securities are generally accounted for at cost and are included in investment
securities.
 87




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  
    
    Loans And Leases Loans and direct financing leases for which Huntington has the intent and
ability to hold for the foreseeable future (at least 12 months), or until maturity or payoff,
are classified in the balance sheet as loans and leases. Loans and leases are carried at the
principal amount outstanding, net of unamortized deferred loan origination fees and costs and
net of unearned income. Direct financing leases are reported at the aggregate of lease
payments receivable and estimated residual values, net of unearned and deferred income.
Interest income is accrued as earned using the interest method based on unpaid principal
balances. Huntington defers the fees it receives from the origination of loans and leases, as
well as the direct costs of those activities. Huntington also acquires loans at a premium and
at a discount to their contractual values. Huntington amortizes loan discounts, loan premiums
and net loan origination fees and costs on a level-yield basis over the estimated lives of the
related loans. Management evaluates direct financing leases individually for impairment.Loans that Huntington has the intent to sell or securitize are classified as held for sale. Loans
held for sale (excluding loans originated or acquired with the intent to sale) are carried at the
lower of cost or fair value. The fair value option was elected for this financial instrument to
facilitate hedging of the loans. Fair value is determined based on collateral value and prevailing
market prices for loans with similar characteristics. Subsequent declines in fair value are
recognized either as a charge-off or as non-interest income, depending on the length of time the
loan has been recorded as held for sale. When a decision is made to sell a loan that was not
originated or initially acquired with the intent to sell, the loan is reclassified into held for
sale. Such reclassifications may occur, and have occurred in the past several years, due to a
change in strategy in managing the balance sheet.Automobile loans and leases include loans secured by automobiles and leases of automobiles that
qualify for the direct financing method of accounting. Substantially all of the direct financing
leases that qualify for that accounting method do so because, at the time of origination, the
present value of the lease payments and the guaranteed residual value were at least 90% of the
cost of the vehicle. Huntington records the residual values of its leases based on estimated
future market values of the automobiles as published in the Automotive Lease Guide (ALG), an
authoritative industry source. Prior to October 9, 2007, Huntington purchased residual value
insurance which provided for the recovery of the vehicle residual value specified by the ALG at
the inception of the lease. As a result, the risk associated with market driven declines in used
car values was mitigated. In December 2008, Huntington reached a settlement with its residual
value insurance carrier releasing such carrier from all obligations under its residual value
insurance policies with Huntington in return for a lump sum one time payment.Automobile leases originated after October 9, 2007 were not covered by a third party residual
value insurance policy at the time of origination. The absence of insurance on these automobile
leases required them to be recorded as operating leases (see operating lease assets below).Residual values on leased automobiles and equipment are evaluated quarterly for impairment.
Impairment of the residual values of direct financing leases is recognized by writing the leases
down to fair value with a charge to other non-interest expense. Residual value losses arise if the
expected fair value at the end of the lease term is less than the residual value recorded at
original lease, net of estimated amounts reimbursable by the lessee. Future declines in the
expected residual value of the leased equipment would result in expected losses of the leased
equipment.For leased equipment, the residual component of a direct financing lease represents the estimated
fair value of the leased equipment at the end of the lease term. Huntington uses industry data,
historical experience, and independent appraisals to establish these residual value estimates.
Additional information regarding product life cycle, product upgrades, as well as insight into
competing products are obtained through relationships with industry contacts and are factored into
residual value estimates where applicable.Commercial and industrial loans and commercial real estate loans are generally placed on
non-accrual status and stop accruing interest when principal or interest payments are 90 days or
more past due or the borrowers creditworthiness is in doubt. A loan may remain in accruing status
when it is sufficiently collateralized, which means the collateral covers the full repayment of
principal and interest, and is in the process of active collection.Commercial loans are evaluated periodically for impairment in accordance with the provisions of
Statement No. 114, Accounting by Creditors for Impairment of a Loan(Statement 114), as amended.
Statement 114 requires an allowance to be established as a component of the allowance for loan and
lease losses when, based upon current information and events, it is probable that all amounts due
according to the contractual terms of the loan or lease will not be collected. The amount of the
impairment is
 88




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  (See Note 5 for further information.)
  
    
    Sold Loans And Leases Loans or direct financing leases that are sold are accounted for in
accordance with FASB Statement No. 140, Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities(Statement No. 140). For loan or lease sales with
servicing retained, an asset is also recorded for the right to service the loans sold, based
on the fair value of the servicing rights.Gains and losses on the loans and leases sold and servicing rights associated with loan and lease
sales are determined when the related loans or leases are sold to the trust or third party. Fair
values of the servicing rights are based on the present value of expected future cash flows from
servicing the underlying loans, net of adequate compensation to service the loans. The present
value of expected future cash flows is determined using assumptions for market interest rates,
ancillary fees, and prepayment rates. Management also uses these assumptions to assess automobile
loan servicing rights for impairment periodically. The servicing rights are recorded in accrued
income and other assets in the consolidated balance sheets. Servicing revenues on mortgage and
automobile loans are included in mortgage banking income and other non-interest income,
respectively.
    
    Allowance For Credit Losses The allowance for credit losses (ACL) reflects Managements
judgment as to the level of the ACL considered appropriate to absorb probable inherent credit
losses. This judgment is based on the size and current risk characteristics of the portfolio,
a review of individual loans and leases, historical and anticipated loss experience, and a
review of individual relationships where applicable. External influences such as general
economic conditions, economic conditions in the relevant geographic areas and specific
industries, regulatory guidelines, and other factors are also assessed in determining the
level of the allowance.The determination of the allowance requires significant estimates, including the timing and
amounts of expected future cash flows on impaired loans and leases, consideration of current
economic conditions, and historical loss experience pertaining to pools of homogeneous loans and
leases, all of which may be susceptible to change. The allowance is increased through a provision
for credit losses that is charged to earnings, based on Managements quarterly evaluation of the
factors previously mentioned, and is reduced by charge-offs, net of recoveries, and the allowance
associated with securitized or sold loans.The ACL consists of two components, the transaction reserve, which includes specific reserves in
accordance with Statement No. 114, and the economic reserve. Loan and lease losses related to the
transaction reserve are recognized and measured pursuant to Statement No. 5, Accounting for
Contingencies, and Statement No. 114, while losses related to the economic reserve are recognized
and measured pursuant to Statement No. 5. The two components are more fully described below.The transaction reserve component of the ACL includes both (a) an estimate of loss based on pools
of commercial and consumer loans and leases with similar characteristics and (b) an estimate of
loss based on an impairment review of each loan greater than $1 million for business-banking
loans, and $500,000 for all other loans that is considered to be impaired. For commercial loans,
the estimate of loss based on pools of loans and leases with similar characteristics is made
through the use of a standardized loan grading system that is applied on an individual loan level
and updated on a continuous basis. The reserve factors applied to these portfolios were developed
based on internal credit migration models that track historical movements of
 89




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
   
    
    Other Real Estate Owned Other real estate owned (OREO) is comprised principally of
commercial and residential real estate properties obtained in partial or total satisfaction of
loan obligations. OREO also includes government insured loans in the process of foreclosure.
OREO obtained in satisfaction of a loan is recorded at the estimated fair value less
anticipated selling costs based upon the propertys appraised value at the date of transfer,
with any difference between the fair value of the property and the carrying value of the loan
charged to the allowance for loan losses. Subsequent changes in value are reported as
adjustments to the carrying amount, not to exceed the initial carrying value of the assets at
the time of transfer. Changes in value subsequent to transfer are recorded in non-interest
expense. Gains or losses not previously recognized resulting from the sale of OREO are
recognized in non-interest expense on the date of sale.
 
    
    Resell And Repurchase Agreements  Securities purchased under agreements to resell and
securities sold under agreements to repurchase are generally treated as collateralized
financing transactions and are recorded at the amounts at which the securities were acquired
or sold plus accrued interest. The fair value of collateral either received from or provided
to a third party is continually monitored and additional collateral is obtained or is
requested to be returned to Huntington in accordance with the agreement.
 
    
    Goodwill And Other Intangible Assets Under the purchase method of accounting, the net
assets of entities acquired by Huntington are recorded at their estimated fair value at the
date of acquisition. The excess cost of the acquisition over the fair value of net assets
acquired is recorded as goodwill. Other intangible assets are amortized either on an
accelerated or straight-line basis over their estimated useful lives. Goodwill is evaluated
for impairment on an annual basis at October 1st of each year or whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. Other intangible assets
are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable.
 
    
    Mortgage Banking Activities Huntington recognizes the rights to service mortgage loans as
separate assets, which are included in other assets in the consolidated balance sheets, only
when purchased or when servicing is contractually separated from the underlying mortgage loans
by sale or securitization of the loans with servicing rights retained. Servicing rights are
initially recorded at fair value. All mortgage loan servicing rights (MSRs) are subsequently
carried at fair value, and are included in other assets.To determine the fair value of MSRs, Huntington uses a option adjusted spread cash flow analysis
incorporating market implied forward interest rates to estimate the future direction of mortgage
and market interest rates. The forward rates utilized are derived from the current yield curve for
U.S. dollar interest rate swaps and are consistent with pricing of capital markets instruments.
The current and projected mortgage interest rate influences the prepayment rate; and therefore,
the timing and magnitude of the cash flows associated with the MSR. Expected mortgage loan
prepayment assumptions are derived from a third party model. Management believes these prepayment
assumptions are consistent with assumptions used by other market participants valuing similar
MSRs.Huntington hedges the value of MSRs using derivative instruments and trading account securities.
Changes in fair value of these derivatives and trading account securities are reported as a
component of mortgage banking income.
 
    
    Premises And Equipment Premises and equipment are stated at cost, less accumulated
depreciation and amortization. Depreciation is computed principally by the straight-line
method over the estimated useful lives of the related assets. Buildings and building
improvements are depreciated over an average of 30 to 40 years and 10 to 20 years,
respectively. Land improvements and furniture and fixtures are depreciated over 10 years,
while equipment is depreciated over a range of three to seven years. Leasehold improvements
are amortized over the lesser of the assets useful life or the term of the related leases,
including any renewal periods for which renewal is reasonably assured. Maintenance and repairs
are charged to expense as incurred, while improvements that extend the useful life of an asset
are capitalized and depreciated over the remaining useful
 90




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  
    
    Bank Owned Life Insurance  Huntingtons bank owned life insurance policies are carried at
their cash surrender value. Huntington recognizes tax-exempt income from the periodic
increases in the cash surrender value of these policies and from death benefits. A portion of
cash surrender value is supported by holdings in separate accounts. Huntington has also
purchased insurance for these policies to provide protection of the value of the holdings
within these separate accounts. The cash surrender value of the policies exceeds the value of
the underlying holdings in the separate accounts covered by these insurance policies by
approximately $27 million at December 31, 2008.
 
    
    Derivative Financial Instruments A variety of derivative financial instruments,
principally interest rate swaps, are used in asset and liability management activities to
protect against the risk of adverse price or interest rate movements. These instruments
provide flexibility in adjusting Huntingtons sensitivity to changes in interest rates without
exposure to loss of principal and higher funding requirements.Derivative financial instruments are accounted for in accordance with Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities(Statement No. 133), as amended. This
Statement requires derivative instruments to be recorded in the consolidated balance sheet as
either an asset or a liability (in other assets or other liabilities, respectively) and measured
at fair value, with changes to fair value recorded through earnings unless specific criteria are
met to account for the derivative using hedge accounting.Huntington also uses derivatives, principally loan sale commitments, in hedging its mortgage loan
interest rate lock commitments and its mortgage loans held for sale. Mortgage loan sale
commitments and the related interest rate lock commitments are carried at fair value on the
consolidated balance sheet with changes in fair value reflected in mortgage banking revenue.
Huntington also uses certain derivative financial instruments to offset changes in value of its
residential mortgage loan servicing assets. These derivatives consist primarily of forward
interest rate agreements, and forward mortgage securities. The derivative instruments used are not
designated as hedges under Statement No. 133. Accordingly, such derivatives are recorded at fair
value with changes in fair value reflected in mortgage banking income.For those derivatives to which hedge accounting is applied, Huntington formally documents the
hedging relationship and the risk management objective and strategy for undertaking the hedge.
This documentation identifies the hedging instrument, the hedged item or transaction, the nature
of the risk being hedged, and, unless the hedge meets all of the criteria to assume there is no
ineffectiveness, the method that will be used to assess the effectiveness of the hedging
instrument and how ineffectiveness will be measured. The methods utilized to assess retrospective
hedge effectiveness, as well as the frequency of testing, vary based on the type of item being
hedged and the designated hedge period. For specifically designated fair value hedges of certain
fixed-rate debt, Huntington utilizes the short-cut method when all the criteria of paragraph 68 of
Statement No. 133 are met. For other fair value hedges of fixed-rate debt, including certificates
of deposit, Huntington utilizes the cumulative dollar offset or the regression method to evaluate
hedge effectiveness on a quarterly basis. For fair value hedges of portfolio loans, the regression
method is used to evaluate effectiveness on a daily basis. For cash flow hedges, the cumulative
dollar offset method is applied on a quarterly basis. For hedging relationships that are
designated as fair value hedges, changes in the fair value of the derivative are, to the extent
that the hedging relationship is effective, recorded through earnings and offset against changes
in the fair value of the hedged item. For cash flow hedges, changes in the fair value of the
derivative are, to the extent that the hedging relationship is effective, recorded as other
comprehensive income and subsequently recognized in earnings at the same time that the hedged item
is recognized in earnings. Any portion of a hedge that is ineffective is recognized immediately as
other non-interest income. When a cash flow hedge is discontinued because the originally
forecasted transaction is not probable of occurring, any net gain or loss in accumulated other
comprehensive income is recognized immediately as other non-interest income.Like other financial instruments, derivatives contain an element of credit risk, which is the
possibility that Huntington will incur a loss because a counterparty fails to meet its contractual
obligations. Notional values of interest rate swaps and other off-balance sheet financial
instruments significantly exceed the credit risk associated with these instruments and represent
contractual balances on which calculations of amounts to be exchanged are based. Credit exposure
is limited to the sum of the aggregate fair value of positions that have become favorable to
Huntington, including any accrued interest receivable due from counterparties. Potential credit
losses are mitigated through careful evaluation of counterparty credit standing, selection of
counterparties from a limited group of high quality institutions, collateral agreements, and other
contract provisions. In accordance with FASB Staff Position (FSP) FIN 39-1, Huntington considers
the value of collateral held and collateral provided in determining the net carrying value of it
derivatives.
 
    
    Advertising Costs Advertising costs are expensed as incurred and recorded as a marketing
expense, a component of non-interest expense.
 
    
    Income Taxes Income taxes are accounted for under the asset and liability method.
Accordingly, deferred tax assets and liabilities are recognized for the future book and tax
consequences attributable to temporary differences between the financial
 91




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
 Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109
 
    
    Treasury Stock Acquisitions of treasury stock are recorded at cost. The reissuance of
shares in treasury is recorded at weighted-average cost.
 
    
    Share-Based Compensation Huntington uses the fair value recognition provisions of FASB
Statement No. 123 (revised 2004), Share-Based Payment(Statement No. 123R), relating to its
share-based compensation plans. Under these provisions, compensation expense is recognized
based on the fair value of unvested stock options and awards over the requisite service
period.
 
    
    Segment Results Accounting policies for the lines of business are the same as those used
in the preparation of the consolidated financial statements with respect to activities
specifically attributable to each business line. However, the preparation of business line
results requires management to establish methodologies to allocate funding costs and benefits,
expenses, and other financial elements to each line of business. Changes are made in these
methodologies utilized for certain balance sheet and income statement allocations performed by
Huntingtons management reporting system, as appropriate.
 
    
    Statement Of Cash Flows Cash and cash equivalents are defined as Cash and due from banks
and Federal funds sold and securities purchased under resale agreements.
 
    
    Fair Value Measurements The Company records certain of its assets and liabilities at fair
value. Fair value is defined as the exchange price that would be received for an asset or paid
to transfer a liability (an exit price) in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on the measurement
date. Fair value measurements are classified within one of three levels in a valuation
hierarchy based upon the transparency of inputs to the valuation of an asset or liability as
of the measurement date. The three levels are defined as follows:Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets
or liabilities in active markets.Level 2 inputs to the valuation methodology include quoted prices for similar assets and
liabilities in active markets, 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 to the valuation methodology are unobservable and significant to the fair value
measurement. A financial instruments categorization within the valuation hierarchy is based upon
the lowest level of input that is significant to the fair value measurement.
  Standards Adopted In 2008:
 
    
    FASB Statement No. 157, Fair Value Measurements (Statement No. 157) In September 2006, the
FASB issued Statement No. 157. This Statement establishes a common definition for fair value
to be applied to GAAP guidance requiring use of fair value, establishes a framework for
measuring fair value, and expands disclosure about such fair value measurements. Statement No.
157 is effective for fiscal years beginning after November 15, 2007. Huntington adopted
Statement No. 157 effective January 1, 2008. The financial impact of this pronouncement was
not material to Huntingtons consolidated financial statements (see Consolidated Statements of
Changes in Shareholders Equity and Note 19).In February 2008, the FASB issued two Staff Positions (FSPs) on Statement No. 157: FSP 157-1,
Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting
Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or
Measurement Under Statement 13, and FSP 157-2, Effective Date of FASB Statement No. 157. FSP
157-1 excludes fair value measurements related to leases from the disclosure requirements of
Statement No. 157. FSP 157-2 delays the effective date of Statement No. 157 for all non-recurring
fair value measurements of nonfinancial assets and nonfinancial liabilities until fiscal years
beginning after November 15, 2008. Huntington is applying the deferral guidance in FSP 157-2, and
accordingly, has not applied the non-recurring disclosure to non-financial assets or non-financial
liabilities valued at fair value on a non-recurring basis.
 92




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
 Determining the Fair Value of a Financial Asset When
the Market for That Asset Is Not Active Fair Value Measurements,
 
    
    FASB Statement
No. 159,The Fair Value Option for Financial Assets and Financial Liabilities
(Statement No. 159) In February 2007, the FASB issued Statement No. 159. This Statement
permits entities to choose to measure certain financial assets and financial liabilities at
fair value. This Statement is effective for fiscal years beginning after November 15, 2007.
Huntington adopted Statement No. 159, effective January 1, 2008. The impact of this new
pronouncement was not material to Huntingtons consolidated financial statements (see
Consolidated Statements of Changes in Shareholders Equity and Note 19).
 
    
    FSP FIN 39-1, Amendment of FASB Interpretation No. 39 (FSP 39-1)  In April 2007, the FASB
issued FSP 39-1, Amendment of FASB Interpretation No. 39, Offsetting of Amounts Related to Certain Contracts. FSP
39-1 permits entities to offset fair value amounts recognized for multiple derivative instruments
executed with the same counterparty under a master netting agreement. FSP 39-1 clarifies that the
fair value amounts recognized for the right to reclaim cash collateral, or the obligation to
return cash collateral, arising from the same master netting arrangement, should also be offset
against the fair value of the related derivative instruments. The Company has historically
presented all of its derivative positions and related collateral on a gross basis.Effective January 1, 2008, the Company adopted a net presentation for derivative positions and
related collateral entered into under master netting agreements pursuant to the guidance in FIN 39
and FSP 39-1. The adoption of this guidance resulted in balance sheet reclassifications of certain
cash collateral-based short-term investments against the related derivative liabilities and
certain deposit liability balances against the related fair values of derivative assets. The
effects of these reclassifications will fluctuate based on the fair values of the derivative
contracts but overall are not expected to have a material impact on either total assets or total
liabilities. The adoption of this presentation change did not have an impact on stockholders
equity, results of operations, or liquidity.
 
    
    Securities and
Exchange Commission (SEC)
Staff Accounting Bulletin
No. 109, Written Loan
Commitments Recorded at FairValue Through Earnings(SAB 109)  In November 2007, the SEC issued SAB 109. SAB 109 provides the
staffs views on the accounting for written loan commitments recorded at fair value. To make the
staff s views consistent with Statement No. 156, Accounting for Servicing of Financial Assets,
and Statement No. 159, SAB 109 revises and rescinds portions of SAB No. 105, Application of
Accounting Principles to Loan Commitments, and requires that the expected net future cash flows
related to the associated servicing of a loan should be included in the measurement of all written
loan commitments that are accounted for at fair value through earnings. The provisions of SAB 109
are applicable to written loan commitments issued or modified in fiscal quarters beginning after
December 15, 2007. Huntington adopted SAB 109, effective January 1, 2008. The impact of this new
pronouncement was not material to Huntingtons consolidated financial statements.
 
    
    FASB Statement
No. 161,Disclosures about Derivative
Instruments and Hedging Activities  an
amendment of FASB Statement No. 133(Statement No. 161)  The FASB issued Statement No. 161
in March 2008. This Statement changes the disclosure requirements for derivative instruments
and hedging activities. Entities are required to provide enhanced disclosures about (a) how
and why an entity uses derivative instruments, (b) how derivative instruments and related
hedged items are accounted for under Statement No. 133 and its related interpretations, and
(c) how derivative instruments and related hedged items affect an entitys financial position,
financial performance, and cash flows. This Statement is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008, with early
application encouraged. This Statement encourages, but does not require, comparative
disclosures for earlier periods at initial adoption. Huntington early adopted the provisions
of Statement No. 161 in the fourth quarter of 2008. The impact of adoption was not material to
Huntingtons consolidated financial statements.
 
    
    FASB Statement
No. 162,The Hierarchy of Generally Accepted Accounting Principles (Statement
No. 162) Statement No. 162 identifies the sources of accounting principles and the
framework for selecting the principles to be used in the preparation of financial statements
of nongovernmental entities that are presented in conformity with generally accepted
accounting principles (GAAP) in the United States (the GAAP hierarchy). This Statement became
effective on November 15, 2008. The impact of adoption was not material to Huntingtons
consolidated financial statements.
 
    
    FSP FAS 140-4 and
FIN46(R)-8,Disclosures by Public Entities (Enterprises) About Transfers
of Financial Assets and Interests in Variable Interest Entities In December 2008, the FASB
issued this FSP to amend the disclosure guidance in Statement No. 140 and Interpretation No.
46 (revised December 2003). The FSP requires public entities to provide additional disclosures
about transfers of financial assets and their involvement with variable interest entities. The
FSP is effective for Huntington at December 31, 2008. Additional disclosures have been
provided in Notes 12 and 13.
    
    FSP Eitf 99-20-1, Amendments to the Impairment and Interest Income Measurement Guidance of EITF Issue No. 99-20  In January 2009, the FASB issued FSP EITF 99-20-1 to amend the impairment guidance in EITF Issue No. 99-20
 93




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  STANDARDS NOT YET FULLY ADOPTED AS OF DECEMBER 31, 2008:
 
    
    FASB Statement
No. 141 (Revised 2007),Business Combinations (Statement No. 141R) 
Statement No. 141R was issued in December 2007. The revised statement requires an acquirer to
recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree at the acquisition date, measured at their fair values as of that date, with limited
exceptions specified in the Statement. Statement No. 141R requires prospective application for
business combinations consummated in fiscal years beginning on or after December 15, 2008.
Early application is prohibited.
 
    
    FASB Statement
No. 160,Noncontrolling Interests in
Consolidated Financial Statements an
amendment of ARB No. 51 (Statement No. 160) Statement No. 160 was issued in December 2007.
The Statement requires that noncontrolling interests in subsidiaries be initially measured at
fair value and classified as a separate component of equity. The Statement is effective for
fiscal years beginning on or after December 15, 2008. Earlier adoption is prohibited. The
adoption of this new Statement will not have a material impact on Huntingtons consolidated
financial statements.
 
    
    FASB Statement
No. 163,Accounting for Financial Guarantee Insurance Contracts  an
interpretation of FASB Statement No. 60 (Statement No. 163) Statement No. 163 requires that
an insurance enterprise recognize a claim liability prior to an event of default (insured
event) when there is evidence that credit deterioration has occurred in an insured financial
obligation. This Statement also clarifies how Statement No. 60 applies to financial guarantee
insurance contracts, including the recognition and measurement to be used to account for
premium revenue and claim liabilities. This Statement requires expanded disclosures about
financial guarantee insurance contracts. This Statement is effective for financial statements
issued for fiscal years and interim periods beginning after December 15, 2008. The adoption of
this Statement will not have a material impact on the Companys consolidated financial
statements.
     94




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
   Unrealized(in thousands)
    
    Amortized Cost
    
    
    Gross Gains
    
    
    Gross Losses
    
    
    Fair Value2008U.S. Treasury
    
    $
    11,141
    
    
    $
    16
    
    
    $
    
    
    
    $
    11,157Federal AgenciesMortgage-backed securities
    
    
    1,625,656
    
    
    
    18,822
    
    
    
    (16,897
    )
    
    
    1,627,581Other agencies
    
    
    587,500
    
    
    
    16,748
    
    
    
    (8
    )
    
    
    604,240Total Federal agencies
    
    
    2,213,156
    
    
    
    35,570
    
    
    
    (16,905
    )
    
    
    2,231,821Asset-backed securities
    
    
    652,881
    
    
    
    
    
    
    
    (188,854
    )
    
    
    464,027Municipal securities
    
    
    710,148
    
    
    
    13,897
    
    
    
    (13,699
    )
    
    
    710,346Private label collaterized mortgage obligations
    
    
    674,506
    
    
    
    
    
    
    
    (150,991
    )
    
    
    523,515Other securities
    
    
    443,991
    
    
    
    114
    
    
    
    (514
    )
    
    
    443,591Total investment securities
    
    $
    4,705,823
    
    
    $
    49,597
    
    
    $
    (370,963
    )
    
    $
    4,384,457
 Unrealized(in thousands)
    
    Amortized Cost
    
    
    Gross Gains
    
    
    Gross Losses
    
    
    Fair Value2007U.S. Treasury
    
    $
    549
    
    
    $
    7
    
    
    $
    
    
    
    $
    556Federal AgenciesMortgage-backed securities
    
    
    1,559,388
    
    
    
    13,743
    
    
    
    (1,139
    )
    
    
    1,571,992Other agencies
    
    
    170,195
    
    
    
    2,031
    
    
    
    (2
    )
    
    
    172,224Total Federal agencies
    
    
    1,729,583
    
    
    
    15,774
    
    
    
    (1,141
    )
    
    
    1,744,216Asset-backed securities
    
    
    869,654
    
    
    
    2,915
    
    
    
    (38,080
    )
    
    
    834,489Municipal securities
    
    
    691,384
    
    
    
    8,507
    
    
    
    (2,565
    )
    
    
    697,326Private label collaterized mortgage obligations
    
    
    784,339
    
    
    
    4,109
    
    
    
    (5,401
    )
    
    
    783,047Other securities
    
    
    440,152
    
    
    
    432
    
    
    
    (47
    )
    
    
    440,537Total investment securities
    
    $
    4,515,661
    
    
    $
    31,744
    
    
    $
    (47,234
    )
    
    $
    4,500,171
   2008
    
    
    2007(in thousands)
    
    Amortized Cost
    
    
    Fair Value
    
    
    Amortized Cost
    
    
    Fair ValueUnder 1 year
    
    $
    11,690
    
    
    $
    11,709
    
    
    $
    104,477
    
    
    $
    104,5201-5 years
    
    
    637,982
    
    
    
    656,659
    
    
    
    87,584
    
    
    
    89,7206-10 years
    
    
    225,186
    
    
    
    231,226
    
    
    
    186,577
    
    
    
    188,273Over 10 years
    
    
    3,394,931
    
    
    
    3,049,334
    
    
    
    3,714,072
    
    
    
    3,694,722Non-marketable equity securities
    
    
    427,973
    
    
    
    427,973
    (1)
    
    
    414,583
    
    
    
    414,583
    (1)Marketable equity securities
    
    
    8,061
    
    
    
    7,556
    
    
    
    8,368
    
    
    
    8,353Total investment securities
    
    $
    4,705,823
    
    
    $
    4,384,457
    
    
    $
    4,515,661
    
    
    $
    4,500,171
 
 (1)
    
    Non-marketable equity securities are valued at amortized cost.  95




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  Less than 12 Months
    
    
    Over 12 Months
    
    
    Total2008
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    Unrealized(in thousands)
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesU.S. Treasury
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Federal agenciesMortgage-backed securities
    
    
    417,988
    
    
    
    (16,897
    )
    
    
    
    
    
    
    
    
    
    
    417,988
    
    
    
    (16,897
    )Other agencies
    
    
    
    
    
    
    
    
    
    
    2,028
    
    
    
    (8
    )
    
    
    2,028
    
    
    
    (8
    )Total Federal agencies
    
    
    417,988
    
    
    
    (16,897
    )
    
    
    2,028
    
    
    
    (8
    )
    
    
    420,016
    
    
    
    (16,905
    )Asset-backed securities
    
    
    61,304
    
    
    
    (24,220
    )
    
    
    164,074
    
    
    
    (164,634
    )
    
    
    225,378
    
    
    
    (188,854
    )Municipal securities
    
    
    276,990
    
    
    
    (6,951
    )
    
    
    40,913
    
    
    
    (6,748
    )
    
    
    317,903
    
    
    
    (13,699
    )Private label CMO
    
    
    449,494
    
    
    
    (130,914
    )
    
    
    57,024
    
    
    
    (20,077
    )
    
    
    506,518
    
    
    
    (150,991
    )Other securities
    
    
    1,132
    
    
    
    (323
    )
    
    
    1,149
    
    
    
    (191
    )
    
    
    2,281
    
    
    
    (514
    )Total temporarily impaired securities
    
    $
    1,206,908
    
    
    $
    (179,305
    )
    
    $
    265,188
    
    
    $
    (191,658
    )
    
    $
    1,472,096
    
    
    $
    (370,963
    )
 Less than 12 Months
    
    
    Over 12 Months
    
    
    Total2007
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    Unrealized(in thousands)
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesU.S. Treasury
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Federal agenciesMortgage-backed securities
    
    
    128,629
    
    
    
    (1,139
    )
    
    
    
    
    
    
    
    
    
    
    128,629
    
    
    
    (1,139
    )Other agencies
    
    
    497
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    497
    
    
    
    (2
    )Total Federal agencies
    
    
    129,126
    
    
    
    (1,141
    )
    
    
    
    
    
    
    
    
    
    
    129,126
    
    
    
    (1,141
    )Asset-backed securities
    
    
    653,603
    
    
    
    (33,422
    )
    
    
    71,790
    
    
    
    (4,658
    )
    
    
    725,393
    
    
    
    (38,080
    )Municipal securities
    
    
    163,721
    
    
    
    (1,432
    )
    
    
    106,305
    
    
    
    (1,133
    )
    
    
    270,026
    
    
    
    (2,565
    )Private label CMO
    
    
    273,137
    
    
    
    (5,401
    )
    
    
    
    
    
    
    
    
    
    
    273,137
    
    
    
    (5,401
    )Other securities
    
    
    6,627
    
    
    
    (47
    )
    
    
    
    
    
    
    
    
    
    
    6,627
    
    
    
    (47
    )Total temporarily impaired securities
    
    $
    1,226,214
    
    
    $
    (41,443
    )
    
    $
    178,095
    
    
    $
    (5,791
    )
    
    $
    1,404,309
    
    
    $
    (47,234
    )
  (in thousands)
    
    2008
    
    
    2007
    
    
    2006Gross gains on sales of securities
    
    $
    9,364
    
    
    $
    15,216
    
    
    $
    8,413Losses on sales of securities
    
    
    (10
    )
    
    
    (1,680
    )
    
    
    (55,150
    )Other-than-temporary impairment recorded
    
    
    (206,724
    )
    
    
    (43,274
    )
    
    
    (26,454
    )Total securities gains (losses)
    
    $
    (197,370
    )
    
    $
    (29,738
    )
    
    $
    (73,191
    )
    96




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##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  At December 31,(in thousands)
    
    2008
    
    
    2007Commercial and industrialLease payments receivable
    
    $
    1,119,487
    
    
    $
    977,183Estimated residual value of leased assets
    
    
    56,705
    
    
    
    52,438Gross investment in commercial lease financing receivables
    
    
    1,176,192
    
    
    
    1,029,621Net deferred origination costs
    
    
    3,946
    
    
    
    4,469Unearned income
    
    
    (151,296
    )
    
    
    (139,422
    )Total net investment in commercial lease financing receivables
    
    $
    1,028,842
    
    
    $
    894,668ConsumerLease payments receivable
    
    $
    246,919
    
    
    $
    543,640Estimated residual value of leased assets
    
    
    362,512
    
    
    
    740,621Gross investment in consumer lease financing receivables
    
    
    609,431
    
    
    
    1,284,261Net deferred origination fees
    
    
    (840
    )
    
    
    (1,368
    )Unearned income
    
    
    (45,174
    )
    
    
    (103,388
    )Total net investment in consumer lease financing receivables
    
    $
    563,417
    
    
    $
    1,179,505
   Franklin Credit Management Relationship
    Commercial Loans To Franklin
 Bank Group
    
    Participated
    
    Previously
    
    Huntington(in thousands)
    
    Franklin
    
    Tribeca
    
    Exposure
    
    to others
    
    charged off(1)
    
    TotalVariable rate, term loan (Facility A)
    
    $
    502,436
    
    
    $
    355,451
    
    
    $
    857,887
    
    
    $
    (144,789
    )
    
    $
    (62,873
    )
    
    $
    650,225Variable rate, subordinated term loan (Facility B)
    
    
    314,013
    
    
    
    96,226
    
    
    
    410,239
    
    
    
    (68,149
    )
    
    
    (342,090
    )
    
    
    Fixed rate, junior subordinated term loan (Facility C)
    
    
    125,000
    
    
    
    
    
    
    
    125,000
    
    
    
    (8,224
    )
    
    
    (116,776
    )
    
    
    Line of credit facility
    
    
    1,958
    
    
    
    
    
    
    
    1,958
    
    
    
    
    
    
    
    (1,958
    )
    
    
    Other variable rate term loans
    
    
    40,937
    
    
    
    
    
    
    
    40,937
    
    
    
    (20,468
    )
    
    
    (20,469
    )
    
    
    Subtotal
    
    
    984,344
    
    
    
    451,677
    
    
    
    1,436,021
    
    
    $
    (241,630
    )
    
    $
    (544,166
    )
    
    $
    650,225Participated to others
    
    
    (150,271
    )
    
    
    (91,359
    )
    
    
    (241,630
    )Total principal owed to Huntington
    
    
    834,073
    
    
    
    360,318
    
    
    
    1,194,391Previously charged off(1)
    
    
    (435,097
    )
    
    
    (109,069
    )
    
    
    (544,166
    )Total book value of loans
    
    $
    398,976
    
    
    $
    251,249
    
    
    $
    650,225
 (1)
    
    Includes $4.1 million of interest payments received and applied to the recorded balance.
 97




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
   Single Family Home Builders
   Retail Properties
   Home Equity And Residential Mortgage Loans
   98




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
 Related Party Transactions
  (in thousands)
    
    2008
    
    
    2007Balance, beginning of year
    
    $
    96,393
    
    
    $
    56,506Loans made
    
    
    121,417
    
    
    
    125,229Repayments
    
    
    (127,023
    )
    
    
    (98,366
    )Changes due to status of executive officers and directors
    
    
    
    
    
    
    13,024Balance, end of year
    
    $
    90,787
    
    
    $
    96,393
       (in thousands)
    
    2008
    
    
    2007Fair value, beginning of period
    
    $
    207,894
    
    
    $
    131,104New servicing assets created
    
    
    38,846
    
    
    
    32,058Servicing assets acquired
    
    
    
    
    
    
    81,450Change in fair value during the period due to:Time decay(1)
    
    
    (7,842
    )
    
    
    (6,226
    )Payoffs(2)
    
    
    (18,792
    )
    
    
    (14,361
    )Changes in valuation inputs or assumptions(3)
    
    
    (52,668
    )
    
    
    (16,131
    )Fair value, end of year
    
    $
    167,438
    
    
    $
    207,894
 (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.
  99




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  Decline in fairvalue due to10%
    
    
    20%adverse
    
    
    adverse(in thousands)
    
    Actual
    
    
    change
    
    
    changeConstant pre-payment rate
    
    
    24.50
    %
    
    $
    (9,362
    )
    
    $
    (19,200
    )Spread over forward interest rate swap rates
    
    430bps
    
    
    
    (2,759
    )
    
    
    (5,519
    )
     Year Ended December 31,(in thousands)
    
    2008
    
    
    2007
    
    
    2006Allowance for loan and leases losses, beginning of year (ALLL)
    
    $
    578,442
    
    
    $
    272,068
    
    
    $
    268,347Acquired allowance for loan and lease losses
    
    
    
    
    
    
    188,128
    
    
    
    23,785Loan and lease losses
    
    
    (806,329
    )
    
    
    (517,943
    )
    
    
    (119,692
    )Recoveries of loans previously charged off
    
    
    48,262
    
    
    
    40,312
    
    
    
    37,316Net loan and lease losses
    
    
    (758,067
    )
    
    
    (477,631
    )
    
    
    (82,376
    )Provision for loan and lease losses
    
    
    1,067,789
    
    
    
    628,802
    
    
    
    62,312Economic reserve transfer
    
    
    12,063
    
    
    
    
    
    
    
    Allowance for loans transferred to held-for-sale
    
    
    
    
    
    
    (32,925
    )
    
    
    Allowance for loan and lease losses, end of year
    
    $
    900,227
    
    
    $
    578,442
    
    
    $
    272,068Allowance for unfunded loan commitments and letters of credit, beginning of year (AULC)
    
    $
    66,528
    
    
    $
    40,161
    
    
    $
    36,957Acquired AULC
    
    
    
    
    
    
    11,541
    
    
    
    325(Reduction in) provision for unfunded loan commitments and letters of credit losses
    
    
    (10,326
    )
    
    
    14,826
    
    
    
    2,879Economic reserve transfer
    
    
    (12,063
    )
    
    
    
    
    
    
    Allowance for unfunded loan commitments and letters of credit, end of year
    
    $
    44,139
    
    
    $
    66,528
    
    
    $
    40,161Total allowances for credit losses (ACL)
    
    $
    944,366
    
    
    $
    644,970
    
    
    $
    312,229Recorded balance of impaired loans, at end of year(1):With specific reserves assigned to the loan and lease balances(2)
    
    $
    1,122,575
    
    
    $
    1,318,518
    
    
    $
    35,212With no specific reserves assigned to the loan and lease balances
    
    
    75,799
    
    
    
    33,062
    
    
    
    25,662Total
    
    $
    1,198,374
    
    
    $
    1,351,580
    
    
    $
    60,874Average balance of impaired loans for the year(1)
    
    $
    1,369,857
    
    
    $
    424,797
    
    
    $
    65,907Allowance for loan and lease losses on impaired loans(1)
    
    
    301,457
    
    
    
    142,058
    
    
    
    7,612
 
 (1)
    
    Includes impaired commercial and industrial loans and commercial real estate 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. Impaired loans are included in
non-performing assets. The amount of interest recognized in 2008, 2007 and 2006 on impaired loans
while they were considered impaired was $55.8 million, $0.9 million, and less than $0.1 million,
respectively. 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 are included in impaired loans at the end of
2007 and in 2008.
  100




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
   Regional
    
    
    
    
    
    
    Treasury/
    
    
    Huntington(in thousands)
    
    Banking
    
    
    PFCMIG
    
    
    Other
    
    
    ConsolidatedBalance, January 1, 2007
    
    $
    535,855
    
    
    $
    35,021
    
    
    $
    
    
    
    $
    570,876Goodwill acquired during the period
    
    
    2,370,804
    
    
    
    56,946
    
    
    
    61,845
    
    
    
    2,489,595Adjustments
    
    
    (504
    )
    
    
    (4,450
    )
    
    
    3,816
    
    
    
    (1,138
    )Balance, December 31, 2007
    
    
    2,906,155
    
    
    
    87,517
    
    
    
    65,661
    
    
    
    3,059,333Adjustments
    
    
    (17,811
    )
    
    
    65,661
    
    
    
    (52,198
    )
    
    
    (4,348
    )Balance, December 31, 2008
    
    $
    2,888,344
    
    
    $
    153,178
    
    
    $
    13,463
    
    
    $
    3,054,985
  Goodwill and Other Intangible Assets
  GrossCarrying
    
    
    Accumulated
    
    
    Net(in thousands)
    
    Amount
    
    
    Amortization
    
    
    Carrying ValueDecember 31, 2008Core deposit intangible
    
    $
    373,300
    
    
    $
    (111,163
    )
    
    $
    262,137Customer relationship
    
    
    104,574
    
    
    
    (16,776
    )
    
    
    87,798Other
    
    
    29,327
    
    
    
    (22,559
    )
    
    
    6,768Total other intangible assets
    
    $
    507,201
    
    
    $
    (150,498
    )
    
    $
    356,703December 31, 2007Core deposit intangible
    
    $
    373,300
    
    
    $
    (46,057
    )
    
    $
    327,243Customer relationship
    
    
    104,574
    
    
    
    (7,055
    )
    
    
    97,519Other
    
    
    23,655
    
    
    
    (20,447
    )
    
    
    3,208Total other intangible assets
    
    $
    501,529
    
    
    $
    (73,559
    )
    
    $
    427,970
  Amortization(in thousands)
    
    Expense2009
    
    $
    68,3722010
    
    
    60,4552011
    
    
    53,3102012
    
    
    46,0662013
    
    
    40,429
 101




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
   At December 31,(in thousands)
    
    2008
    
    
    2007Land and land improvements
    
    $
    119,042
    
    
    $
    122,224Buildings
    
    
    352,294
    
    
    
    355,560Leasehold improvements
    
    
    185,278
    
    
    
    176,952Equipment
    
    
    557,653
    
    
    
    565,303Total premises and equipment
    
    
    1,214,267
    
    
    
    1,220,039Less accumulated depreciation and amortization
    
    
    (694,767
    )
    
    
    (662,474
    )Net premises and equipment
    
    $
    519,500
    
    
    $
    557,565
  Year Ended December 31,(in thousands)
    
    2008
    
    
    2007
    
    
    2006Total depreciation and amortization of premises and equipment
    
    $
    77,956
    
    
    $
    64,052
    
    
    $
    52,333Rental income credited to occupancy expense
    
    
    12,917
    
    
    
    12,808
    
    
    
    11,602
   At December 31,(in thousands)
    
    2008
    
    
    2007Federal funds purchased
    
    $
    50,643
    
    
    $
    1,013,119Securities sold under agreements to repurchase
    
    
    1,238,484
    
    
    
    1,693,307Other borrowings
    
    
    20,030
    
    
    
    137,212Total short-term borrowings
    
    $
    1,309,157
    
    
    $
    2,843,638
      At December 31,(in thousands)
    
    2008
    
    
    20074.63% The Huntington National Bank medium-term notes due through 2018(1)
    
    $
    505,177
    
    
    $
    715,4651.34% Securitization trust note payable due 2012(2)
    
    
    4,005
    
    
    
    155,6664.08% Securitization trust notes payable due through 2013(3)
    
    
    721,555
    
    
    
    1.68% Securitization trust note payable due 2018(4)
    
    
    1,050,895
    
    
    
    1,015,9477.88% Class C preferred securities of REIT subsidiary, no maturity
    
    
    50,000
    
    
    
    50,000Total other long-term debt
    
    $
    2,331,632
    
    
    $
    1,937,078
 (1)
    
    Bank notes had fixed rates with a weighted-average
interest rate of 4.63% at December 31, 2008.(2)
    
    Variable effective rate at December 31, 2008, based on
one month LIBOR + 0.33.(3)
    
    Combination of fixed and variable rates with a weighted
average interest rate of 4.08% at December 31, 2008. (4)
Variable effective rate at December 31, 2008, based on one
month LIBOR + 0.67.
   102




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
   Loan Securitizations
  December 31, 2008(in thousands)
    
    2008 Trust
    
    
    2006 Trust
    
    
    2000 Trust
    
    
    TotalAssetsCash
    
    $
    31,758
    
    
    $
    205,179
    
    
    $
    24,850
    
    
    $
    261,787Loans and leases
    
    
    824,218
    
    
    
    1,230,791
    
    
    
    100,149
    
    
    
    2,155,158Allowance for loan and lease losses
    
    
    (8,319
    )
    
    
    (12,368
    )
    
    
    (1,011
    )
    
    
    (21,698
    )Net loans and leases
    
    
    815,899
    
    
    
    1,218,423
    
    
    
    99,138
    
    
    
    2,133,460Accrued income and other assets
    
    
    5,998
    
    
    
    6,853
    
    
    
    433
    
    
    
    13,284Total assets
    
    $
    853,655
    
    
    $
    1,430,455
    
    
    $
    124,421
    
    
    $
    2,408,531LiabilitiesOther long-term debt
    
    $
    721,555
    
    
    $
    1,050,895
    
    
    $
    4,005
    
    
    $
    1,776,455Accrued interest and other liabilities
    
    
    1,253
    
    
    
    11,193
    
    
    
    
    
    
    
    12,446Total liabilities
    
    $
    722,808
    
    
    $
    1,062,088
    
    
    $
    4,005
    
    
    $
    1,788,901
    At December 31,(in thousands)
    
    2008
    
    2007Parent company:6.11% subordinated notes due 2008
    
    $
    
    
    
    $
    50,0206.21% subordinated notes due 2013
    
    
    48,391
    
    
    
    48,0704.12% junior subordinated debentures due 2027(1)
    
    
    158,366
    
    
    
    184,8362.62% junior subordinated debentures due 2028(2)
    
    
    71,093
    
    
    
    93,0938.54% junior subordinated debentures due 2029
    
    
    23,347
    
    
    
    23,3894.20% junior subordinated debentures due 2030
    
    
    65,910
    
    
    
    66,8487.71% junior subordinated debentures due 2033(3)
    
    
    30,929
    
    
    
    31,4118.07% junior subordinated debentures due 2033(4)
    
    
    6,186
    
    
    
    6,2242.43% junior subordinated debentures due 2036(5)
    
    
    78,136
    
    
    
    78,4654.84% junior subordinated debentures due 2036(5)
    
    
    78,137
    
    
    
    78,4666.69% junior subordinated debentures due 2067(6)
    
    
    249,408
    
    
    
    249,356The Huntington National Bank:8.18% subordinated notes due 2010
    
    
    143,261
    
    
    
    145,1676.21% subordinated notes due 2012
    
    
    64,816
    
    
    
    64,7735.00% subordinated notes due 2014
    
    
    221,727
    
    
    
    198,0765.59% subordinated notes due 2016
    
    
    284,048
    
    
    
    253,3656.67% subordinated notes due 2018
    
    
    244,769
    
    
    
    213,7935.45% subordinated notes due 2019
    
    
    181,573
    
    
    
    148,924Total subordinated notes
    
    $
    1,950,097
    
    
    $
    1,934,276
 (1)
    
    Variable effective rate at December 31, 2008,
based on three month LIBOR + 0.70.(2)
    
    Variable
effective rate at December 31, 2008, based on
three month LIBOR + 0.625.(3)
    
    Variable effective
rate at December 31, 2008, based on three month
LIBOR + 3.25.
 103




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
 (4)
    
    Variable effective rate at December 31, 2008, based on three month LIBOR + 2.95.(5)
    
    Variable effective rate at December 31, 2008, based on three month LIBOR + 1.40.(6)
    
    The junior subordinated debentures due 2067 are subordinate to all other junior subordinated
debentures.
   Trust Preferred Securities
  Principal amountof subordinated
    
    
    Investment innote/debenture
    
    
    unconsolidated(in thousands)
    
    issued to trust(1)
    
    
    subsidiaryHuntington Capital I
    
    $
    158,366
    
    
    $
    6,186Huntington Capital II
    
    
    71,093
    
    
    
    3,093Huntington Capital III
    
    
    249,408
    
    
    
    10BankFirst Ohio Trust Preferred
    
    
    23,347
    
    
    
    619Sky Financial Capital Trust I
    
    
    65,910
    
    
    
    1,856Sky Financial Capital Trust II
    
    
    30,929
    
    
    
    929Sky Financial Capital Trust III
    
    
    78,136
    
    
    
    2,320Sky Financial Capital Trust IV
    
    
    78,137
    
    
    
    2,320Prospect Trust I
    
    
    6,186
    
    
    
    186Total
    
    $
    761,512
    
    
    $
    17,519
 (1)
    
    Represents the principal amount of debentures issued to each trust, including unamortized
original issue discount.
    Issuance Of Convertible Preferred Stock
   104




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
 Troubled Asset Relief Program (TARP)
    Share Repurchase Program
     105




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  Year Ended December 31,(in thousands, except per share amounts)
    
    2008
    
    
    2007
    
    
    2006Basic (loss) earnings per common shareNet (loss) income
    
    $
    (113,806
    )
    
    $
    75,169
    
    
    $
    461,221Preferred stock dividends and amortization of discount
    
    
    (46,400
    )
    
    
    
    
    
    
    Net (loss) income available to common shareholders
    
    $
    (160,206
    )
    
    $
    75,169
    
    
    $
    461,221Average common shares issued and outstanding
    
    
    366,155
    
    
    
    300,908
    
    
    
    236,699Basic (loss) earnings per common share
    
    $
    (0.44
    )
    
    $
    0.25
    
    
    $
    1.95Diluted (loss) earnings per common shareNet (loss) income available to common shareholders
    
    $
    (160,206
    )
    
    $
    75,169
    
    
    $
    461,221Effect of assumed preferred stock conversion
    
    
    
    
    
    
    
    
    
    
    Net (loss) income applicable to diluted earnings per share
    
    $
    (160,206
    )
    
    $
    75,169
    
    
    $
    461,221Average common shares issued and outstanding
    
    
    366,155
    
    
    
    300,908
    
    
    
    236,699Dilutive potential common shares:Stock options and restricted stock units
    
    
    
    
    
    
    1,887
    
    
    
    2,917Shares held in deferred compensation plans
    
    
    
    
    
    
    660
    
    
    
    304Conversion of preferred stock
    
    
    
    
    
    
    
    
    
    
    Dilutive potential common shares:
    
    
    
    
    
    
    2,547
    
    
    
    3,221Total diluted average common shares issued and outstanding
    
    
    366,155
    
    
    
    303,455
    
    
    
    239,920Diluted (loss) earnings per common share
    
    $
    (0.44
    )
    
    $
    0.25
    
    
    $
    1.92
      106




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  2008
    
    
    2007
    
    
    2006AssumptionsRisk-free interest rate
    
    
    3.41
    %
    
    
    4.74
    %
    
    
    4.96
    %Expected dividend yield
    
    
    5.28
    
    
    
    5.26
    
    
    
    4.24Expected volatility of Huntingtons common stock
    
    
    34.8
    
    
    
    21.1
    
    
    
    22.2Expected option term (years)
    
    
    6.0
    
    
    
    6.0
    
    
    
    6.0Weighted-average grant date fair value per share
    
    $
    1.54
    
    
    $
    2.80
    
    
    $
    4.21
   Weighted-Weighted-
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    Intrinsic(in thousands, except per share amounts)
    
    Options
    
    
    Price
    
    
    Life (Years)
    
    
    ValueOutstanding at January 1, 2008
    
    
    28,065
    
    
    $
    20.55Granted
    
    
    1,876
    
    
    
    7.23Forfeited/expired
    
    
    (3,652
    )
    
    
    21.66Outstanding at December 31, 2008
    
    
    26,289
    
    
    $
    19.45
    
    
    
    3.8
    
    
    $
    1,142Exercisable at December 31, 2008
    
    
    22,694
    
    
    $
    20.32
    
    
    
    3.5
    
    
    $
    
    Weighted-AverageRestricted
    
    
    Grant DateStock
    
    
    Fair Value(in thousands, except per share amounts)
    
    Units
    
    
    Per ShareNonvested at January 1, 2008
    
    
    1,086
    
    
    $
    21.35Granted
    
    
    877
    
    
    
    7.09Vested
    
    
    (54
    )
    
    
    20.78Forfeited
    
    
    (86
    )
    
    
    18.61Nonvested at December 31, 2008
    
    
    1,823
    
    
    $
    14.64
  107




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  Options Outstanding
    
    
    Exercisable OptionsWeighted-Average
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Remaining
    
    
    Average
    
    
    
    
    
    
    AverageContractual
    
    
    Exercise
    
    
    
    
    
    
    Exercise(in thousands, except per share amounts)
    
    Shares
    
    
    Life (Years)
    
    
    Price
    
    
    Shares
    
    
    PriceRange of Exercise Prices$6.97 to $10.00
    
    
    1,833
    
    
    
    6.6
    
    
    $
    7.17
    
    
    
    3
    
    
    $
    9.91$10.01 to $15.00
    
    
    1,910
    
    
    
    1.9
    
    
    
    14.00
    
    
    
    1,892
    
    
    
    14.01$15.01 to $20.00
    
    
    7,887
    
    
    
    3.1
    
    
    
    17.65
    
    
    
    7,832
    
    
    
    17.65$20.01 to $25.00
    
    
    13,268
    
    
    
    4.4
    
    
    
    22.14
    
    
    
    11,600
    
    
    
    22.30$25.01 to $28.35
    
    
    1,391
    
    
    
    0.4
    
    
    
    27.68
    
    
    
    1,367
    
    
    
    27.66Total
    
    
    26,289
    
    
    
    3.8
    
    
    $
    19.45
    
    
    
    22,694
    
    
    $
    20.32
        108




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  Year Ended December 31,(in thousands)
    
    2008
    
    
    2007
    
    
    2006Current tax (benefit) provisionFederal
    
    $
    (30,164
    )
    
    $
    135,196
    
    
    $
    340,665State
    
    
    (102
    )
    
    
    288
    
    
    
    222Total current tax (benefit) provision
    
    
    (30,266
    )
    
    
    135,484
    
    
    
    340,887Deferred tax (benefit) provisionFederal
    
    
    (152,306
    )
    
    
    (188,518
    )
    
    
    (288,475
    )State
    
    
    370
    
    
    
    508
    
    
    
    428Total deferred tax (benefit) provision
    
    
    (151,936
    )
    
    
    (188,010
    )
    
    
    (288,047
    )(Benefit) provision for income taxes
    
    $
    (182,202
    )
    
    $
    (52,526
    )
    
    $
    52,840
   Year Ended December 31,(in thousands)
    
    2008
    
    2007
    
    2006(Benefit) provision for income taxes computed at the statutory rate
    
    $
    (103,603
    )
    
    $
    7,925
    
    
    $
    179,921Increases (decreases):Tax-exempt interest income
    
    
    (12,484
    )
    
    
    (13,161
    )
    
    
    (10,449
    )Tax-exempt bank owned life insurance income
    
    
    (19,172
    )
    
    
    (17,449
    )
    
    
    (15,321
    )Asset securitization activities
    
    
    (14,198
    )
    
    
    (18,627
    )
    
    
    (10,157
    )Federal tax loss carryforward/carryback
    
    
    (12,465
    )
    
    
    
    
    
    
    (33,086
    )General business credits
    
    
    (10,481
    )
    
    
    (8,884
    )
    
    
    (7,130
    )Reversal of valuation allowance
    
    
    (7,101
    )
    
    
    
    
    
    
    Resolution of federal income tax audit
    
    
    
    
    
    
    
    
    
    
    (52,604
    )Other, net
    
    
    (2,698
    )
    
    
    (2,330
    )
    
    
    1,666(Benefit) provision for income taxes
    
    $
    (182,202
    )
    
    $
    (52,526
    )
    
    $
    52,840
 109




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  At December 31,(in thousands)
    
    2008
    
    
    2007Deferred tax assets:Allowances for credit losses
    
    $
    220,450
    
    
    $
    170,231Loss and other carryforwards
    
    
    16,868
    
    
    
    36,500Fair value adjustments
    
    
    170,360
    
    
    
    33,238Securities adjustments
    
    
    44,380
    
    
    
    Partnerships investments
    
    
    7,402
    
    
    
    22,257Operating assets
    
    
    
    
    
    
    30,286Accrued expense/prepaid
    
    
    42,153
    
    
    
    41,446Purchase accounting adjustments
    
    
    3,289
    
    
    
    Other
    
    
    14,014
    
    
    
    51,239Total deferred tax assets
    
    
    518,916
    
    
    
    385,197Deferred tax liabilities:Lease financing
    
    
    283,438
    
    
    
    413,227Pension and other employee benefits
    
    
    33,687
    
    
    
    21,154Purchase accounting adjustments
    
    
    
    
    
    
    27,913Mortgage servicing rights
    
    
    31,921
    
    
    
    38,732Operating assets
    
    
    5,358
    
    
    
    Loan origination costs
    
    
    34,698
    
    
    
    16,793Other
    
    
    13,929
    
    
    
    56,256Total deferred tax liability
    
    
    403,031
    
    
    
    574,075Net deferred tax asset (liability) before valuation allowance
    
    $
    115,885
    
    
    $
    (188,878
    )Valuation allowance
    
    
    (14,536
    )
    
    
    35,852Net deferred tax asset (liability)
    
    $
    101,349
    
    
    $
    (224,730
    )
      Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans  an amendment of
 110




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
 FASB Statements No. 87, 88, 106, and 132R (Statement No. 158)
  Post-RetirementPension Benefits
    
    
    Benefits2008
    
    
    2007
    
    
    2008
    
    
    2007Weighted-average assumptions used to determine benefit obligations at December 31Discount rate
    
    
    6.17
    %
    
    
    6.30
    %
    
    
    6.17
    %
    
    
    6.30
    %Rate of compensation increase
    
    
    4.00
    
    
    
    5.00
    
    
    
    N/A
    
    
    
    N/A
 Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31
 Discount rate
    
    
    6.47
    %
    
    
    5.97
    %
    
    
    6.47
    %
    
    
    5.97
    %Expected return on plan assets
    
    
    8.00
    
    
    
    8.00
    
    
    
    N/A
    
    
    
    N/ARate of compensation increase
    
    
    5.00
    
    
    
    5.00
    
    
    
    N/A
    
    
    
    N/A
 
 N/A,
    
    Not Applicable   Post-RetirementPension Benefits
    
    
    Benefits(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Projected benefit obligation at beginning of measurement year
    
    $
    427,828
    
    
    $
    425,704
    
    
    $
    59,008
    
    
    $
    48,221Impact of change in measurement date
    
    
    (1,956
    )
    
    
    
    
    
    
    (804
    )
    
    
    Changes due to:Service cost
    
    
    23,680
    
    
    
    19,087
    
    
    
    1,679
    
    
    
    1,608Interest cost
    
    
    26,804
    
    
    
    24,408
    
    
    
    3,612
    
    
    
    2,989Benefits paid
    
    
    (8,630
    )
    
    
    (7,823
    )
    
    
    (3,552
    )
    
    
    (3,242
    )Settlements
    
    
    (12,459
    )
    
    
    (12,080
    )
    
    
    
    
    
    
    Plan amendments
    
    
    
    
    
    
    2,295
    
    
    
    
    
    
    
    15,685Actuarial assumptions and gains and losses
    
    
    14,429
    
    
    
    (23,763
    )
    
    
    490
    
    
    
    (6,253
    )Total changes
    
    
    43,824
    
    
    
    2,124
    
    
    
    2,229
    
    
    
    10,787Projected benefit obligation at end of measurement year
    
    $
    469,696
    
    
    $
    427,828
    
    
    $
    60,433
    
    
    $
    59,008
  111




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  Pension Benefits(in thousands)
    
    2008
    
    
    2007Fair value of plan assets at beginning of measurement year
    
    $
    516,893
    
    
    $
    481,015Impact of change in measurement date
    
    
    (10,347
    )
    
    
    Changes due to:Actual (loss) return on plan assets
    
    
    (127,354
    )
    
    
    56,981Employer contributions
    
    
    50,000
    
    
    
    Settlements
    
    
    (13,482
    )
    
    
    (13,280
    )Benefits paid
    
    
    (8,631
    )
    
    
    (7,823
    )Total changes
    
    
    (99,467
    )
    
    
    35,878Fair value of plan assets at end of measurement year
    
    $
    407,079
    
    
    $
    516,893
   Pension Benefits
    
    
    Post-Retirement Benefits(in thousands)
    
    2008
    
    
    2007
    
    
    2006
    
    
    2008
    
    
    2007
    
    
    2006Service cost
    
    $
    23,680
    
    
    $
    19,087
    
    
    $
    17,552
    
    
    $
    1,679
    
    
    $
    1,608
    
    
    $
    1,302Interest cost
    
    
    26,804
    
    
    
    24,408
    
    
    
    22,157
    
    
    
    3,612
    
    
    
    2,989
    
    
    
    2,332Expected return on plan assets
    
    
    (39,145
    )
    
    
    (37,056
    )
    
    
    (33,577
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of transition
asset
    
    
    5
    
    
    
    4
    
    
    
    (1
    )
    
    
    1,104
    
    
    
    1,104
    
    
    
    1,104Amortization of prior service
cost
    
    
    314
    
    
    
    1
    
    
    
    1
    
    
    
    379
    
    
    
    379
    
    
    
    489Amortization of gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,095
    )
    
    
    (368
    )
    
    
    (722
    )Settlements
    
    
    7,099
    
    
    
    2,218
    
    
    
    3,565
    
    
    
    
    
    
    
    
    
    
    
    Recognized net actuarial loss
    
    
    3,550
    
    
    
    11,076
    
    
    
    17,509
    
    
    
    
    
    
    
    
    
    
    
    Benefit cost
    
    $
    22,307
    
    
    $
    19,738
    
    
    $
    27,206
    
    
    $
    5,679
    
    
    $
    5,712
    
    
    $
    4,505
    112




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  Fair ValueDecember 31,
    
    September 30,2008
    
    2007(in thousands)
    
    Balance
    
    %
    
    Balance
    
    %Cash
    
    $
    50,000
    
    
    
    12
    %
    
    $
    
    
    
    
    
    %Huntington funds  money market
    
    
    295
    
    
    
    
    
    
    
    65
    
    
    
    Huntington funds  equity funds
    
    
    197,583
    
    
    
    48
    
    
    
    375,883
    
    
    
    73Huntington funds  fixed income funds
    
    
    128,655
    
    
    
    32
    
    
    
    129,867
    
    
    
    25Huntington common stock
    
    
    30,546
    
    
    
    8
    
    
    
    11,078
    
    
    
    2Fair value of plan assets
    
    $
    407,079
    
    
    
    100
    %
    
    $
    516,893
    
    
    
    100
    %
     (in thousands)
    
    Pension Benefits
    
    Post-Retirement Benefit2009
    
    $
    24,549
    
    
    $
    5,0472010
    
    
    26,585
    
    
    
    5,1692011
    
    
    29,404
    
    
    
    5,4282012
    
    
    33,069
    
    
    
    5,6842013
    
    
    35,151
    
    
    
    5,8322014 through 2018
    
    
    202,037
    
    
    
    30,459
    113




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  Employers Accounting for Pensions, Employers Accounting for
Postretirement Benefits Other Than Pensions
  (in thousands)
    
    2008
    
    
    2007Accrued income and other assets
    
    $
    
    
    
    $
    89,246Accrued expenses and other liabilities
    
    
    161,585
    
    
    
    85,228
  (in thousands)
    
    2008
    
    
    2007Net actuarial loss
    
    $
    (156,762
    )
    
    $
    (36,301
    )Prior service cost
    
    
    (4,123
    )
    
    
    (4,914
    )Transition liability
    
    
    (2,691
    )
    
    
    (2,938
    )Defined benefit pension plans
    
    $
    (163,576
    )
    
    $
    (44,153
    )
 2008
    
    
    2007Tax Expense
    
    
    Net
    
    
    
    
    
    
    Tax Expense
    
    
    Net(in thousands)
    
    Pre-tax
    
    
    (benefit)
    
    
    of tax
    
    
    Pre-tax
    
    
    (benefit)
    
    
    of taxBalance, beginning of year
    
    $
    (67,928
    )
    
    $
    23,775
    
    
    $
    (44,153
    )
    
    $
    (132,813
    )
    
    $
    46,485
    
    
    $
    (86,328
    )Impact of change in
measurement date
    
    
    (1,485
    )
    
    
    520
    
    
    
    (965
    )
    
    
    
    
    
    
    
    
    
    
    Net actuarial (loss) gain:Amounts arising during
the year
    
    
    (186,923
    )
    
    
    65,423
    
    
    
    (121,500
    )
    
    
    53,312
    
    
    
    (18,659
    )
    
    
    34,653Amortization included
in net periodic
benefit
costs
    
    
    2,608
    
    
    
    (913
    )
    
    
    1,695
    
    
    
    12,169
    
    
    
    (4,260
    )
    
    
    7,909Prior service cost:Amounts arising during
the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,318
    )
    
    
    811
    
    
    
    (1,507
    )Amortization included
in net periodic
benefit
costs
    
    
    964
    
    
    
    (337
    )
    
    
    627
    
    
    
    615
    
    
    
    (215
    )
    
    
    400Transition obligation:Amounts arising during
the year
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    Amortization included
in net periodic
benefit
costs
    
    
    1,109
    
    
    
    (388
    )
    
    
    721
    
    
    
    1,107
    
    
    
    (387
    )
    
    
    720Balance, end of year
    
    $
    (251,656
    )
    
    $
    88,080
    
    
    $
    (163,576
    )
    
    $
    (67,928
    )
    
    $
    23,775
    
    
    $
    (44,153
    )
    114




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
   Net IncreaseAs of
    
    
    to Retained
    
    
    As ofJanuary 1, 2008
    
    
    Earnings
    
    
    January 1, 2008(in thousands)
    
    prior to Adoption
    
    
    upon Adoption
    
    
    after AdoptionMortgage loans held for sale
    
    $
    420,895
    
    
    $
    2,294
    
    
    $
    423,189Tax impact
    
    
    
    
    
    
    (803
    )Cumulative effect adjustment, net of tax
    
    
    
    
    
    $
    1,491
   Level 1
 Level 2
 Level 3
  Securities
  Mortgage Loans Held FOR Sale
  Mortgage Servicing Rights
  Equity Investments
  115




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  Derivatives
  Assets and liabilities measured at fair value on a recurring basis
  Fair Value Measurements atReporting Date UsingNetting
    
    
    Balance at(in thousands)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Adjustments(1)
    
    
    December 31, 2008AssetsTrading account securities
    
    $
    51,888
    
    
    $
    36,789
    
    
    
    
    
    
    
    
    
    
    $
    88,677Investment securities
    
    
    626,130
    
    
    
    2,342,812
    
    
    $
    987,542
    
    
    
    
    
    
    
    3,956,484Mortgage loans held for
sale
    
    
    
    
    
    
    378,437
    
    
    
    
    
    
    
    
    
    
    
    378,437Mortgage servicing rights
    
    
    
    
    
    
    
    
    
    
    167,438
    
    
    
    
    
    
    
    167,438Derivative assets
    
    
    233
    
    
    
    668,906
    
    
    
    8,182
    
    
    $
    (218,326
    )
    
    
    458,995Equity investments
    
    
    
    
    
    
    
    
    
    
    36,893
    
    
    
    
    
    
    
    36,893LiabilitiesDerivative liabilities
    
    
    11,588
    
    
    
    377,248
    
    
    
    50
    
    
    
    (305,519
    )
    
    
    83,367
 
 (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.  Level 3 Fair Value MeasurementsYear Ended December 31, 2008Mortgage
    
    
    Net Interest
    
    
    Investment
    
    
    Equity(in thousands)
    
    Servicing Rights
    
    
    Rate Locks
    
    
    Securities
    
    
    investmentsBalance, January 1, 2008
    
    $
    207,894
    
    
    $
    (46
    )
    
    $
    834,489
    
    
    $
    41,516Total gains/losses:Included in earnings
    
    
    (40,769
    )
    
    
    8,683
    
    
    
    (198,812
    )
    
    
    (9,242
    )Included in other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    (303,389
    )Purchases, issuances, and settlements
    
    
    313
    
    
    
    (505
    )
    
    
    (127,793
    )
    
    
    4,619Transfers in/out of Level 3
    
    
    
    
    
    
    
    
    
    
    783,047Balance, December 31, 2008
    
    $
    167,438
    
    
    $
    8,132
    
    
    $
    987,542
    
    
    $
    36,893The amount of total gains or losses for the
period included in earnings
(or other comprehensive loss)
attributable to the change in unrealized
gains or losses relating to assets still
held at reporting date
    
    $
    (40,769
    )
    
    $
    8,179
    
    
    $
    (502,201
    )
    
    $
    (3,469
    )
 116




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  Level 3 Fair Value MeasurementsYear Ended December 31, 2008Mortgage
    
    
    Net Interest
    
    
    Investment
    
    
    Equity(in thousands)
    
    Servicing Rights
    
    
    Rate Locks
    
    
    Securities
    
    
    InvestmentsClassification of gains
and losses in earnings:Mortgage banking income
    
    $
    (40,769
    )
    
    $
    8,683Securities losses
    
    
    
    
    
    
    
    
    
    $
    (202,621
    )Interest and fee income
    
    
    
    
    
    
    
    
    
    
    3,809Non-interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (9,242
    )Total
    
    $
    (40,769
    )
    
    $
    8,683
    
    
    $
    (198,812
    )
    
    $
    (9,242
    )
 Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
  Accounting by Creditors for Impairment of a
Loan
 Fair Values of Financial Instruments
  2008
    
    
    2007Carrying
    
    
    
    
    
    
    Carrying(in thousands)
    
    Amount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueFinancial Assets:Cash and short-term assets
    
    $
    1,137,229
    
    
    $
    1,137,229
    
    
    $
    2,349,336
    
    
    $
    2,349,336Trading account securities
    
    
    88,677
    
    
    
    88,677
    
    
    
    1,032,745
    
    
    
    1,032,745Loans held for sale
    
    
    390,438
    
    
    
    390,438
    
    
    
    494,379
    
    
    
    494,460Investment securities
    
    
    4,384,457
    
    
    
    4,384,457
    
    
    
    4,500,171
    
    
    
    4,500,171Net loans and direct financing
leases
    
    
    40,191,938
    
    
    
    33,856,153
    
    
    
    39,475,896
    
    
    
    40,158,604Derivatives
    
    
    458,995
    
    
    
    458,995
    
    
    
    101,893
    
    
    
    101,893Financial Liabilities:Deposits
    
    
    (37,943,286
    )
    
    
    (38,363,248
    )
    
    
    (37,742,921
    )
    
    
    (36,295,978
    )Short-term borrowings
    
    
    (1,309,157
    )
    
    
    (1,252,861
    )
    
    
    (2,843,638
    )
    
    
    (2,776,882
    )Federal Home Loan Bank advances
    
    
    (2,588,976
    )
    
    
    (2,588,445
    )
    
    
    (3,083,555
    )
    
    
    (3,084,590
    )Other long term debt
    
    
    (2,331,632
    )
    
    
    (1,979,441
    )
    
    
    (1,937,078
    )
    
    
    (1,956,342
    )Subordinated notes
    
    
    (1,950,097
    )
    
    
    (1,287,150
    )
    
    
    (1,934,276
    )
    
    
    (1,953,570
    )Derivatives
    
    
    (83,367
    )
    
    
    (83,367
    )
    
    
    (79,883
    )
    
    
    (79,883
    )
   117




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
   Loans and Direct Financing Leases
  Deposits
  Debt
      Derivatives Used in Asset and Liability Management Activities
  Fair Value
    
    
    Cash Flow(in thousands)
    
    Hedges
    
    
    Hedges
    
    
    TotalInstruments associated with:Loans
    
    $
    
    
    
    $
    5,305,000
    
    
    $
    5,305,000Deposits
    
    
    80,000
    
    
    
    
    
    
    
    80,000Federal Home Loan Bank advances
    
    
    
    
    
    
    280,000
    
    
    
    280,000Subordinated notes
    
    
    675,000
    
    
    
    
    
    
    
    675,000Other long-term debt
    
    
    50,000
    
    
    
    
    
    
    
    50,000Total notional value at December 31, 2008
    
    $
    805,000
    
    
    $
    5,585,000
    
    
    $
    6,390,000
 118




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  Average
    
    
    
    
    
    
    Weighted-Average RateNotional
    
    
    Maturity
    
    
    Fair(in thousands )
    
    Value
    
    
    (years)
    
    
    Value
    
    
    Receive
    
    
    PayAsset conversion swapsReceive fixed  generic
    
    $
    5,305,000
    
    
    
    1.8
    
    
    $
    82,743
    
    
    
    2.50
    %
    
    
    1.03
    %Total asset conversion
swaps
    
    
    5,305,000
    
    
    
    1.8
    
    
    
    82,743
    
    
    
    2.50
    
    
    
    1.03Liability conversion swapsReceive fixed  generic
    
    
    750,000
    
    
    
    7.5
    
    
    
    139,846
    
    
    
    5.32
    
    
    
    3.11Receive fixed  callable
    
    
    55,000
    
    
    
    6.5
    
    
    
    314
    
    
    
    4.89
    
    
    
    2.59Pay fixed  generic
    
    
    280,000
    
    
    
    1.0
    
    
    
    (1,266
    )
    
    
    1.89
    
    
    
    5.05Total liability conversion
swaps
    
    
    1,085,000
    
    
    
    5.6
    
    
    
    138,894
    
    
    
    4.41
    
    
    
    3.59Total swap portfolio
    
    
    6,390,000
    
    
    
    2.5
    
    
    
    221,637
    
    
    
    2.82
    %
    
    
    1.47
    %
 Weighted-AverageStrike RatePurchased capsInterest rate caps
    
    
    300,000
    
    
    
    0.5
    
    
    
    32
    
    
    
    5.50
    %Total purchased caps
    
    $
    300,000
    
    
    
    0.5
    
    
    $
    32
    
    
    
    5.50
    %Purchased floorsInterest rate floors
    
    
    200,000
    
    
    
    3.1
    
    
    
    8,932
    
    
    
    3.00
    %Total purchased floors
    
    $
    200,000
    
    
    
    3.1
    
    
    $
    8,932
    
    
    
    3.00
    %
    Asset Derivatives Included in Accrued Income and Other Assets
 At December 31,(in thousands)
    
    2008
    
    
    2007Interest rate contracts designated as hedging instruments
    
    $
    230,601
    
    
    $
    16,043Interest rate contracts not designated as hedging instruments
    
    
    436,131
    
    
    
    113,246Total Contracts
    
    $
    666,732
    
    
    $
    129,289
 Liability Derivatives Included in Accrued Expenses and Other Liabilities
 At December 31,(in thousands)
    
    2008
    
    
    2007Interest rate contracts designated as hedging instruments
    
    $
    
    
    
    $
    12,759Interest rate contracts not designated as hedging instruments
    
    
    377,249
    
    
    
    78,122Total Contracts
    
    $
    377,249
    
    
    $
    90,881
  119




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  Derivatives in fair
    
    
    
    
    Increase (decrease)value hedging relationships
    
    Location of change in fair value recognized in earnings on derivative
    
    to interest expense(in thousands)
    
    
    
    
    
    2008
    
    
    2007Interest Rate
ContractsDeposits
    
    Interest Expense  Deposits
    
    $
    (2,322
    )
    
    $
    4,120Subordinated
notes
    
    Interest Expense  Subordinated notes and other long term debt
    
    
    (15,349
    )
    
    
    260Other long term
debt
    
    Interest Expense  Subordinated notes and other long term debt
    
    
    3,810
    
    
    
    6,598Total
    
    
    
    
    
    $
    (13,861
    )
    
    $
    10,978
    Amount ofAmount of
    
    
    
    
    gain or (loss)gain or (loss)
    
    
    
    
    reclassified fromrecognized in
    
    
    
    
    accumulated OCLDerivatives in cash flow
    
    OCL on derivative
    
    
    Location of gain or (loss) reclassified
    
    into earningshedging relationships
    
    (effective portion)
    
    
    from accumulated OCL into earnings (effective portion)
    
    (effective portion)(in thousands)
    
    2008
    
    
    2007
    
    
    
    
    2008
    
    
    2007Interest rate contractsLoans
    
    $
    54,887
    
    
    $
    
    
    
    Interest and fee income  loans and leases
    
    $
    (9,207
    )
    
    $
    10,257FHLB Advances
    
    
    2,394
    
    
    
    (4,186
    )
    
    Interest expense  FHLB Advances
    
    
    (12,490
    )
    
    
    (13,034
    )Deposits
    
    
    2,842
    
    
    
    (1,946
    )
    
    Interest expense  deposits
    
    
    (4,169
    )
    
    
    (360
    )Subordinated notes
    
    
    (101
    )
    
    
    
    
    
    Interest expense  subordinated notes and other long term debt
    
    
    (4,408
    )
    
    
    (5,512
    )Other long term debt
    
    
    239
    
    
    
    (125
    )
    
    Interest expense  subordinated notes and other long term debt
    
    
    (865
    )
    
    
    (886
    )Total
    
    $
    60,261
    
    
    $
    (6,257
    )
    
    
    
    $
    (31,139
    )
    
    $
    (9,535
    )
  Derivatives in cash flow hedging relationships(in thousands)
    
    2008
    
    
    2007Interest rate contractsLoans
    
    $
    3,821
    
    
    $
    FHLB Advances
    
    
    783
    
    
    
    9Total
    
    $
    4,604
    
    
    $
    9
 Derivatives Used in Trading Activities
  120




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
      Commitments to Extend Credit
  At December 31,(in millions)
    
    2008
    
    
    2007Contract amount represents credit riskCommitments to extend creditCommercial
    
    $
    6,494
    
    
    $
    6,756Consumer
    
    
    4,964
    
    
    
    4,680Commercial real estate
    
    
    1,951
    
    
    
    2,565Standby letters of credit
    
    
    1,272
    
    
    
    1,549
    121




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
   Commitments to Sell Loans
  Litigation
      122




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
 Low Income Housing Tax Credit Partnerships
   Commitments Under Capital and Operating Lease Obligations
      Tier 1
    
    
    Total Capital
    
    
    Tier 1 Leverage(in millions)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Huntington Bancshares IncorporatedAmount
    
    $
    5,036
    
    
    $
    3,460
    
    
    $
    6,535
    
    
    $
    4,995
    
    
    $
    5,036
    
    
    $
    3,460Ratio
    
    
    10.72
    %
    
    
    7.51
    %
    
    
    13.91
    %
    
    
    10.85
    %
    
    
    9.82
    %
    
    
    6.77
    %The Huntington National BankAmount
    
    $
    2,995
    
    
    $
    3,037
    
    
    $
    4,978
    
    
    $
    4,650
    
    
    $
    2,995
    
    
    $
    3,037Ratio
    
    
    6.44
    %
    
    
    6.64
    %
    
    
    10.71
    %
    
    
    10.17
    %
    
    
    5.99
    %
    
    
    5.99
    %
  123




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
       Balance Sheets
    
    December 31,(in thousands)
    
    2008
    
    
    2007ASSETSCash and cash equivalents(1)
    
    $
    1,122,056
    
    
    $
    153,489Due from The Huntington National Bank
    
    
    532,746
    
    
    
    144,526Due from non-bank subsidiaries
    
    
    338,675
    
    
    
    332,517Investment in The Huntington National Bank
    
    
    5,274,261
    
    
    
    5,607,872Investment in non-bank subsidiaries
    
    
    854,575
    
    
    
    844,032Accrued interest receivable and other assets
    
    
    146,167
    
    
    
    165,416Total assets
    
    $
    8,268,480
    
    
    $
    7,247,852LIABILITIES AND SHAREHOLDERS EQUITYShort-term borrowings
    
    $
    1,852
    
    
    $
    2,578Long-term borrowings
    
    
    803,699
    
    
    
    902,169Dividends payable, accrued expenses, and other liabilities
    
    
    235,788
    
    
    
    393,965Total liabilities
    
    
    1,041,339
    
    
    
    1,298,712Shareholders equity
    
    
    7,227,141
    
    
    
    5,949,140Total liabilities and shareholders equity(2)
    
    $
    8,268,480
    
    
    $
    7,247,852
 
 (1)
    
    Includes restricted cash of $125,000 at December 31, 2008.(2)
    
    See page 85 for Huntingtons Consolidated Statements of Changes in Shareholders Equity. 124




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
 Statements of Income
    
    Year Ended December 31,(in thousands)
    
    2008
    
    
    2007
    
    
    2006IncomeDividends fromThe Huntington National Bank
    
    $
    142,254
    
    
    $
    239,000
    
    
    $
    575,000Non-bank subsidiaries
    
    
    69,645
    
    
    
    41,784
    
    
    
    47,476Interest fromThe Huntington National Bank
    
    
    19,749
    
    
    
    18,622
    
    
    
    13,167Non-bank subsidiaries
    
    
    12,700
    
    
    
    12,180
    
    
    
    10,880Management fees from subsidiaries
    
    
    
    
    
    
    3,882
    
    
    
    9,539Other
    
    
    108
    
    
    
    1,180
    
    
    
    23Total income
    
    
    244,456
    
    
    
    316,648
    
    
    
    656,085ExpensePersonnel costs
    
    
    24,398
    
    
    
    24,818
    
    
    
    31,427Interest on borrowings
    
    
    44,890
    
    
    
    41,189
    
    
    
    17,856Other
    
    
    240
    
    
    
    14,667
    
    
    
    20,040Total expense
    
    
    69,528
    
    
    
    80,674
    
    
    
    69,323Income before income taxes and equity in undistributed net
income of subsidiaries
    
    
    174,928
    
    
    
    235,974
    
    
    
    586,762Income taxes
    
    
    (120,371
    )
    
    
    (39,509
    )
    
    
    (20,922
    )Income before equity in undistributed net income of subsidiaries
    
    
    295,299
    
    
    
    275,483
    
    
    
    607,684Increase (decrease) in undistributed net income of:The Huntington National Bank
    
    
    (98,863
    )
    
    
    (176,083
    )
    
    
    (142,672
    )Non-bank subsidiaries
    
    
    (310,242
    )
    
    
    (24,231
    )
    
    
    (3,791
    )Net (loss) income
    
    $
    (113,806
    )
    
    $
    75,169
    
    
    $
    461,221
 Statements of Cash Flows
    

    Year Ended December 31,(in thousands)
    
    2008
    
    
    2007
    
    
    2006Operating activitiesNet (loss) income
    
    $
    (113,806
    )
    
    $
    75,169
    
    
    $
    461,221Adjustments to reconcile net income to net cash
provided by operating activities:Equity in undistributed net income of subsidiaries
    
    
    266,851
    
    
    
    200,315
    
    
    
    146,463Depreciation and amortization
    
    
    2,071
    
    
    
    4,367
    
    
    
    2,150Other, net
    
    
    65,076
    
    
    
    (51,283
    )
    
    
    170,367Net cash provided by operating activities
    
    
    220,192
    
    
    
    228,568
    
    
    
    780,201Investing activitiesNet cash paid for acquisition
    
    
    
    
    
    
    (313,311
    )
    
    
    Repayments from subsidiaries
    
    
    540,308
    
    
    
    333,469
    
    
    
    370,049Advances to subsidiaries
    
    
    (1,337,165
    )
    
    
    (442,418
    )
    
    
    (397,216
    )Net cash used in investing activities
    
    
    (796,857
    )
    
    
    (422,260
    )
    
    
    (27,167
    )Financing activitiesProceeds from issuance of long-term borrowings
    
    
    
    
    
    
    250,010
    
    
    
    250,200Payment of borrowings
    
    
    (98,470
    )
    
    
    (42,577
    )
    
    
    (249,515
    )Dividends paid on preferred stock
    
    
    (23,242
    )
    
    
    
    
    
    
    Dividends paid on common stock
    
    
    (279,608
    )
    
    
    (289,758
    )
    
    
    (231,117
    )Acquisition of treasury stock
    
    
    
    
    
    
    
    
    
    
    (378,835
    )Proceeds from issuance of preferred stock
    
    
    1,947,625
    
    
    
    
    
    
    
    Proceeds from issuance of common stock
    
    
    (1,073
    )
    
    
    16,782
    
    
    
    41,842Net cash provided by (used in) financing activities
    
    
    1,545,232
    
    
    
    (65,543
    )
    
    
    (567,425
    )Change in cash and cash equivalents
    
    
    968,567
    
    
    
    (259,235
    )
    
    
    185,609Cash and cash equivalents at beginning of year
    
    
    153,489
    
    
    
    412,724
    
    
    
    227,115Cash and cash equivalents at end of year
    
    $
    1,122,056
    
    
    $
    153,489
    
    
    $
    412,724Supplemental disclosure:Interest paid
    
    $
    44,890
    
    
    $
    41,189
    
    
    $
    17,856Dividends in-kind received from The Huntington National Bank
    
    
    124,689
    
    
    
    
    
    
    
    
 125




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  Huntington has three distinct lines of business:
  Regional Banking:
 Auto Finance and Dealer Sales (AFDS):
 Private Financial, Capital Markets, and Insurance Group (PFCMIG):
 Treasury/Other:
  126




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
  Regional
    
    
    
    
    
    
    
    
    
    
    Treasury/
    
    
    HuntingtonINCOME STATEMENTS (in thousands)
    
    Banking
    
    
    AFDS
    
    
    PFCMIG
    
    
    Other
    
    
    Consolidated2008Net interest income
    
    $
    1,413,287
    
    
    $
    142,966
    
    
    $
    103,186
    
    
    $
    (127,748
    )
    
    $
    1,531,691Provision for credit losses
    
    
    (523,488
    )
    
    
    (75,155
    )
    
    
    (20,820
    )
    
    
    (438,000
    )
    
    
    (1,057,463
    )Non-interest income
    
    
    504,991
    
    
    
    59,870
    
    
    
    254,372
    
    
    
    (112,095
    )
    
    
    707,138Non-interest expense
    
    
    (968,820
    )
    
    
    (127,897
    )
    
    
    (246,446
    )
    
    
    (134,211
    )
    
    
    (1,477,374
    )Income taxes
    
    
    (149,089
    )
    
    
    76
    
    
    
    (31,603
    )
    
    
    362,818
    
    
    
    182,202Net (loss) income as reported
    
    $
    276,881
    
    
    $
    (140
    )
    
    $
    58,689
    
    
    $
    (449,236
    )
    
    $
    (113,806
    )2007Net interest income
    
    $
    1,071,975
    
    
    $
    133,947
    
    
    $
    83,208
    
    
    $
    12,382
    
    
    $
    1,301,512Provision for credit losses
    
    
    (177,588
    )
    
    
    (30,603
    )
    
    
    (11,672
    )
    
    
    (423,765
    )
    
    
    (643,628
    )Non-interest income
    
    
    453,881
    
    
    
    41,745
    
    
    
    201,170
    
    
    
    (20,195
    )
    
    
    676,601Non-interest expense
    
    
    (872,607
    )
    
    
    (80,924
    )
    
    
    (203,806
    )
    
    
    (154,505
    )
    
    
    (1,311,842
    )Income taxes
    
    
    (166,481
    )
    
    
    (22,457
    )
    
    
    (24,116
    )
    
    
    265,580
    
    
    
    52,526Net income as reported
    
    $
    309,180
    
    
    $
    41,708
    
    
    $
    44,784
    
    
    $
    (320,503
    )
    
    $
    75,1692006Net interest income
    
    $
    877,114
    
    
    $
    134,998
    
    
    $
    73,701
    
    
    $
    (66,636
    )
    
    $
    1,019,177Provision for credit losses
    
    
    (45,316
    )
    
    
    (14,209
    )
    
    
    (5,666
    )
    
    
    
    
    
    
    (65,191
    )Non-interest income
    
    
    340,553
    
    
    
    83,602
    
    
    
    169,448
    
    
    
    (32,534
    )
    
    
    561,069Non-interest expense
    
    
    (692,968
    )
    
    
    (112,358
    )
    
    
    (142,252
    )
    
    
    (53,416
    )
    
    
    (1,000,994
    )Income taxes
    
    
    (167,784
    )
    
    
    (32,211
    )
    
    
    (33,330
    )
    
    
    180,485
    
    
    
    (52,840
    )Net income as reported
    
    $
    311,599
    
    
    $
    59,822
    
    
    $
    61,901
    
    
    $
    27,899
    
    
    $
    461,221
 Assets
    
    
    DepositsAt December 31,
    
    
    At December 31,BALANCE SHEETS (in millions)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Regional Banking
    
    $
    34,435
    
    
    $
    34,670
    
    
    $
    32,874
    
    
    $
    32,625AFDS
    
    
    6,395
    
    
    
    5,891
    
    
    
    67
    
    
    
    60PFCMIG
    
    
    3,413
    
    
    
    3,003
    
    
    
    1,785
    
    
    
    1,639Treasury/Other
    
    
    10,110
    
    
    
    11,133
    
    
    
    3,217
    
    
    
    3,419Total
    
    $
    54,353
    
    
    $
    54,697
    
    
    $
    37,943
    
    
    $
    37,743
 127




---



##### 



Notes to Consolidated Financial Statements
    
    Huntington Bancshares Incorporated
   2008(in thousands, except per share data)
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    FirstInterest income
    
    $
    662,508
    
    
    $
    685,728
    
    
    $
    696,675
    
    
    $
    753,411Interest expense
    
    
    (286,143
    )
    
    
    (297,092
    )
    
    
    (306,809
    )
    
    
    (376,587
    )Net interest income
    
    
    376,365
    
    
    
    388,636
    
    
    
    389,866
    
    
    
    376,824Provision for credit losses
    
    
    (722,608
    )
    
    
    (125,392
    )
    
    
    (120,813
    )
    
    
    (88,650
    )Non-interest income
    
    
    67,099
    
    
    
    167,857
    
    
    
    236,430
    
    
    
    235,752Non-interest expense
    
    
    (390,094
    )
    
    
    (338,996
    )
    
    
    (377,803
    )
    
    
    (370,481
    )(Loss) income before income taxes
    
    
    (669,238
    )
    
    
    92,105
    
    
    
    127,680
    
    
    
    153,445Benefit (provision) for income taxes
    
    
    251,949
    
    
    
    (17,042
    )
    
    
    (26,328
    )
    
    
    (26,377
    )Net (loss) income
    
    
    (417,289
    )
    
    
    75,063
    
    
    
    101,352
    
    
    
    127,068Dividends on preferred shares
    
    
    (23,158
    )
    
    
    (12,091
    )
    
    
    (11,151
    )
    
    
    Net (loss) income applicable to common shares
    
    $
    (440,447
    )
    
    $
    62,972
    
    
    $
    90,201
    
    
    $
    127,068Net (loss) income per common share  Basic
    
    $
    (1.20
    )
    
    $
    0.17
    
    
    $
    0.25
    
    
    $
    0.35Net (loss) income per common share  Diluted
    
    
    (1.20
    )
    
    
    0.17
    
    
    
    0.25
    
    
    
    0.35
 2007(in thousands, except per share data)
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    FirstInterest income
    
    $
    814,398
    
    
    $
    851,155
    
    
    $
    542,461
    
    
    $
    534,949Interest expense
    
    
    (431,465
    )
    
    
    (441,522
    )
    
    
    (289,070
    )
    
    
    (279,394
    )Net interest income
    
    
    382,933
    
    
    
    409,633
    
    
    
    253,391
    
    
    
    255,555Provision for credit losses
    
    
    (512,082
    )
    
    
    (42,007
    )
    
    
    (60,133
    )
    
    
    (29,406
    )Non-interest income
    
    
    170,557
    
    
    
    204,674
    
    
    
    156,193
    
    
    
    145,177Non-interest expense
    
    
    (439,552
    )
    
    
    (385,563
    )
    
    
    (244,655
    )
    
    
    (242,072
    )(Loss) income before income taxes
    
    
    (398,144
    )
    
    
    186,737
    
    
    
    104,796
    
    
    
    129,254Benefit (provision) for income taxes
    
    
    158,864
    
    
    
    (48,535
    )
    
    
    (24,275
    )
    
    
    (33,528
    )Net (loss) income
    
    $
    (239,280
    )
    
    $
    138,202
    
    
    $
    80,521
    
    
    $
    95,726Net (loss) income per common share  Basic
    
    $
    (0.65
    )
    
    $
    0.38
    
    
    $
    0.34
    
    
    $
    0.41Net (loss) income per common share  Diluted
    
    
    (0.65
    )
    
    
    0.38
    
    
    
    0.34
    
    
    
    0.40
 128