Exhibit 99
HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
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DECEMBER 31, 2001 AND 2000 AND YEAR ENDED DECEMBER 31, 2001
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INDEX
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PAGE
AUDITED FINANCIAL STATEMENTS
Report of Independent Auditors 5
Statements of Net Assets Available for Benefits 6
December 31, 2001 and 2000
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 2001 and 2000 7
Notes to Financial Statements 8
SUPPLEMENTAL SCHEDULE
Schedule H, Line 4i - Schedule of Assets Held for
Investment Purposes at End of Year 14
4
Report of Independent Auditors
Pension Review Committee of the Board of Directors
Huntington Bancshares Incorporated
We have audited the accompanying statements of net assets available for benefits
of the Huntington Investment and Tax Savings Plan as of December 31, 2001 and
2000, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Huntington
Investment and Tax Savings Plan at December 31, 2001 and 2000, and the changes
in its net assets available for benefits for the years then ended, in conformity
with accounting principles generally accepted in the United States.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule of
assets held for investment purposes at the end of year as of December 31, 2001,
is presented for purposes of additional analysis and is not a required part of
the basic financial statements but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedule
is the responsibility of the Plan's management. The supplemental schedule has
been subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Ernst & Young LLP
Columbus, Ohio
June 28, 2002
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HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
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(Amounts in dollars) 2001 2000
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ASSETS
Investments, at market value:
Huntington Bancshares Incorporated
Common Stock $ 177,415,635 $ 189,429,541
Mutual Funds 78,140,895 68,645,859
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Total Investments 255,556,530 258,075,400
Contributions receivable from
Huntington Bancshares Incorporated --- 109,674
Notes receivable from participants 36,288 207,430
Accrued dividends, interest receivable, and
other assets 1,662,997 2,403,163
Cash and cash equivalents 942,853 783,765
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TOTAL ASSETS 258,198,668 261,579,432
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LIABILITIES
Investment purchases payable and other liabilities 1,671,069 2,940,727
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NET ASSETS AVAILABLE FOR BENEFITS $ 256,527,599 $ 258,638,705
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See notes to financial statements.
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HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Years Ended December 31,
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(Amounts in dollars) 2001 2000
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ADDITIONS
Investment income:
Cash dividends on Huntington
Banchares Incorporated Common Stock $ 9,498,468 $ 11,412,990
Interest 276,858 373,990
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9,775,326 11,786,980
Contributions:
Employees 17,870,699 15,417,846
Employer 8,219,756 7,944,093
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26,090,455 23,361,939
Assets of merged plans --- 9,389,399
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Total Additions 35,865,781 44,538,318
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DEDUCTIONS
Benefit distributions and other withdrawals 38,684,243 32,371,981
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Total Deductions 38,684,243 32,371,981
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Net realized and unrealized appreciation (depreciation)
in market value of investments 707,356 (70,567,846)
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Net decrease in plan assets available for benefits (2,111,106) (58,401,509)
Net assets available for benefits at beginning of year 258,638,705 317,040,214
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NET ASSETS AVAILABLE FOR BENEFITS
AT END OF YEAR $ 256,527,599 $ 258,638,705
===============================================================================================================
See notes to financial statements.
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HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2001
NOTE 1 - PLAN DESCRIPTION AND ACCOUNTING POLICIES
The financial statements of the Huntington Bancshares Investment and Tax Savings
Plan (the "Plan") are presented on the accrual basis and are prepared in
conformity with accounting principles generally accepted in the United States,
which requires management to make estimates and assumptions that affect amounts
reported in the financial statements. Actual results could differ from those
estimates. Certain prior period amounts have been reclassified to conform to the
current year's presentation.
DESCRIPTION OF THE PLAN
The Plan was initially adopted by the Board of Directors of Huntington
Bancshares Incorporated ("Huntington") on September 29, 1977, to be effective
January 1, 1978. On August 19, 1992, the Plan was amended and restated,
effective January 1, 1987, to comply with the Internal Revenue Code of 1986, as
amended. The Plan was again restated October 13, 1994, with a general effective
date of January 1, 1987, to incorporate provisions concerning merged plans. The
Plan was again amended and restated November 19, 1997, effective at April 1,
1998. On December 13, 2000, Huntington's Common Stock in the Plan and
participants who elected to have all or a portion of their accounts invested in
Huntington's Common Stock were designated an Employee Stock Ownership Plan
(ESOP). The ESOP forms a portion of the Plan. The following summary describes
the provisions of the Plan in effect as of the Plan year ending December 31,
2001.
FUNDING AND VESTING
Eligible employees may enroll on the first day of the month following six months
of employment and attainment of age 21. Participants may elect to make pre-tax
matched contributions of up to 15% of their eligible compensation. Huntington
will make a matching contribution equal to 100% on the first 3% of participant
elective deferrals and 50% on the next 2% of participant elective deferrals.
Employee and employer contributions are fully vested at all times. Plan
participants are permitted to direct pre-tax elective deferrals and employer
matching contributions to any combination of nineteen investment options,
including Huntington Common Stock. An active participant may change or suspend
pre-tax elective deferrals pursuant to the terms set forth in the Plan document.
ADMINISTRATION
The Plan administrator is Huntington Bancshares Incorporated (Huntington).
Administration of the Plan has been delegated by the Plan administrator to a
committee of employees appointed by the Board of Directors of Huntington.
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Employee and Employer contributions to participants' accounts in the Plan are
invested pursuant to the participants' investment direction elections on file at
the time the contributions are allocated to the participants' accounts. Plan
assets are held in mutual funds or Huntington Common Stock by the trust division
of The Huntington National Bank (the "Plan Trustee"), a wholly-owned subsidiary
of Huntington. The Plan Trustee purchases and sells shares of these mutual funds
or Huntington Common Stock on the open market at market prices. Additionally,
the Plan Trustee may directly purchase from, and sell to, Huntington at market
prices shares of Huntington Common Stock.
Participants are charged a nominal amount for administration of the Plan. All
other trustee and administrative fees are paid from the general assets of
Huntington.
DISTRIBUTIONS AND WITHDRAWALS
A participant may request that the portion of his or her account that is
invested in Huntington Common Stock be distributed in shares of Huntington
Common Stock with cash paid in lieu of any fractional shares. All other
distributions from the Plan are paid in cash.
Distributions and withdrawals are reported at market value.
Participants are permitted to take distributions and withdrawals from their
accounts in the Plan under the circumstances set forth in the Plan document.
Generally, participants may request withdrawal of funds in their account
attributable to: (i) rollover contributions; (ii) after-tax contributions; and
(iii) pre-April 1, 1998 Employer contributions that have been in the
participants' accounts for at least 24 months. Employee pre-tax elective
deferrals and post April 1, 1998, Employer matching contributions are subject to
special withdrawal rules and generally may not be withdrawn from the Plan prior
to a participant's death, disability, termination of employment, or attainment
of age 59 1/2. Certain distributions of Employee pre-tax deferrals may be made,
however, in the event a participant requests a distribution due to financial
hardship as defined by the Plan. Participants should refer to the Summary Plan
Description for a complete summary of the Plan provisions. Participants may
withdraw up to 100% of their account balances in the Plan for any reason after
they have reached age 59 1/2.
Dividends with respect to Huntington Common Stock are distributed in cash to
Plan participants.
DIVIDENDS AND INTEREST INCOME
Dividends are recognized as of the record date. Interest is recorded on an
accrual basis when earned.
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INVESTMENTS
As of December 31, 2001, the separate investment options offered by the Plan are
as follows:
Huntington Bancshares Incorporated Common Stock: This consists mainly of shares
of Huntington Bancshares Incorporated common stock. However, a small percentage
is invested in a money market fund to maintain liquidity for participant
distributions and fund reallocations. Cash dividends received on Huntington
Bancshares Incorporated common stock are paid to participants in cash shortly
after they are received by the Plan Trustees. Huntington Bancshares Incorporated
common stock is listed as HBAN on the National Association of Securities Dealers
Automated Quotation System (NASDAQ).
Vanguard S&P Index 500 Fund: This fund seeks to mirror, as closely as possible,
the performance of the Standard and Poor's (S&P) 500 Composite Stock Price
Index, which emphasizes stocks of large companies. Accordingly, the fund invests
in stocks that are included in the S&P 500 Stock Index.
Vanguard Wellington Fund: This fund seeks to conserve capital and to provide
moderate long-term capital growth and moderate income by investing in stocks,
bonds and money market instruments. The fund invests 60% to 70% of its assets in
dividend-paying stocks of large and medium-sized companies. The remaining 30% to
40% of assets are invested in high-quality longer-term corporate bonds, with
some investment in Treasury, government agency and mortgage-backed bonds.
Huntington Money Market Fund: This fund seeks to provide safety of principal and
interest, a reasonable rate of interest income, little or no fluctuation of
principal, and liquidity. Investments typically include short-term debt
securities, including commercial paper, certificates of deposit, bankers
acceptances and government securities.
Franklin Small Cap Growth Fund: This fund seeks long-term growth of capital by
investing in common stocks of smaller capitalization companies.
Huntington Growth Fund: This fund seeks long-term capital appreciation by
investing primarily in equity securities. The fund invests primarily in medium
to large companies with an emphasis on quality, market dominance and growth.
T. Rowe Price Mid Cap Growth Fund: This fund seeks long-term growth of capital
by investing in common stocks of medium and large capitalization companies.
Bond Fund of America: This fund seeks to provide as high a level of current
income as is consistent with the preservation of capital by investing primarily
in bonds. The fund invests substantially all of its assets in marketable
corporate debt securities, U.S. government securities, mortgage-related
securities, other asset-backed securities and cash or money market instruments.
Normally, at least 60% of the fund assets will be invested in bonds.
Neuberger & Berman Partners Trust Fund: This fund seeks long-term growth of
capital through an approach that is intended to increase capital with reasonable
risk. Investments include common stocks of medium to large capitalization
companies that are believed to be undervalued.
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EuroPacific Growth Fund: This fund seeks long-term growth of capital by
investing in securities of companies domiciled outside the United States,
usually located in Europe and the Pacific Basin. However, the fund may invest in
securities of developing countries as well.
Janus Enterprise Fund: This fund seeks long-term growth of capital by investing
in common stocks selected for their growth potential. It looks at potential
investments one at a time, regardless of industry, country of organization or
other similarly defined selection criteria.
Huntington Income-Equity Trust Fund: This fund seeks to achieve current income
and moderate appreciation of both capital and income by investing in
income-producing securities, such as stocks of companies having the potential to
pay attractive dividends.
Fidelity Low-Priced Stock Fund: This fund seeks capital appreciation by
investing in low priced common stocks, which can lead to investment in small and
medium sized companies. The issuing companies often have market capitalization's
of less that $100 million, and some have a negative net worth.
The Huntington Dividend Capture Fund: This fund is a value-oriented fund that
tries to generate higher income for investors by identifying dividend-paying
stocks and hedging against adverse market swings. The fund invests primarily in
dividend-paying common and preferred stocks that the managers can acquire prior
to ex-dividend date in order to "capture" the dividend. Option contracts may or
may not be employed to serve as a hedge against downside fluctuations.
The Huntington Mid-Corp America Fund: This fund focuses on the 2000 companies in
the middle of the Russell 3000 Index, concentrating on companies with
outstanding growth characteristics.
The Huntington Fixed Income Securities Fund: This fund seeks to achieve high
current income without assuming a great deal of credit risk. This fund invests
in high quality corporate bonds, U.S. Treasuries and government agencies in
order to help investors increase their income potential without assuming a great
deal of credit risk. Maturity ranges are from overnight to 30 years. In
selecting securities for the fund, the portfolio manager considers various "top
down" economic factors including Federal Reserve policies and spreads between
different types of fixed income securities. A proprietary credit evaluation
system is employed to further enhance returns.
Huntington Rotating Index Fund: This fund seeks to approximate the returns of
various equity market indices as determined by the investment advisor to be the
most favorable in a given market environment. The fund will pursue its objective
by investing substantially all of its assets in the stocks that comprise the
equity index selected by the investment advisor. In determining which equity
index the fund will seek to emulate, the investment advisor will use "top-down"
analysis to evaluate broad economic trends, anticipate shifts in the business
cycle, and determine which sectors or industries may benefit most over the next
year. The investment advisor will continually monitor the market environment and
may shift the index that the fund emulates when it is determined that another
equity index is more favorable given the current market environment.
The Huntington New Economy Fund: This aggressive fund is targeted towards
long-term investors seeking capital appreciation. The fund invests primarily in
science and technology companies with the highest potential for growth.
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Huntington International Stock Fund: This fund is an aggressive fund investing
in international stocks with above-average growth potential. At least 80 percent
of the fund's assets will be invested in stocks of companies from at least five
countries included in the Morgan Stanley Capital International Europe,
Australisia and Far East Index.
PARTICIPANT NOTES RECEIVABLE
In conjunction with the merger of First Michigan Bank Corporation into
Huntington, the First Michigan Bank Corporation Cash Option Plan (the "First
Michigan Plan") merged into the Plan effective as of April 1, 1998. The loan
fund represents the transfer of the outstanding participant loan balances in the
First Michigan Plan to the Plan. Additionally, the loan fund represents the
transfer of outstanding participant loan balances to the Plan on October 1, 2000
resulting from the merger with Empire Banc Corporation (the "Empire Plan").
While the Plan does not allow participants to take loans against their account
balances, participants with outstanding loans in the First Michigan Plan and the
Empire Plan at the time of its merger into the Plan are permitted to repay
outstanding loans. Each loan, by its terms, must be repaid within 5 years,
unless it is a loan for a participant's principal residence. The loans bear
interest at a market rate fixed at the date of origination. Principal and
interest is paid by participants through payroll deductions authorized by the
participant currently employed by Huntington. Individuals previously under the
First Michigan Plan terminated from employment are permitted to repay principal
and interest on an installment basis. Individuals with loans previously under
the Empire Plan are required to repay the loans at time of termination.
NOTE 2 - CASH AND CASH EQUIVALENTS
Cash and cash equivalents primarily represent funds temporarily invested in the
Huntington Money Market Fund to provide liquidity for fund reallocations and
distributions.
NOTE 3 - FEDERAL INCOME TAXES
The Plan has received a determination letter from the Internal Revenue Service
dated April 19, 2000, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (the "Code") and, therefore, the related trust is
exempt from taxation. However, subsequent to the issuance of the favorable
determination letter, the Plan has been amended. The Plan Administrator believes
the Plan, as amended, is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax exempt.
NOTE 4 - TERMINATED PARTICIPANTS
Included in net assets available for benefits are amounts allocated to
individuals who have withdrawn from the Plan. Amounts allocated to these
participants were $273,230 and $679,651 at December 31, 2001 and 2000,
respectively.
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NOTE 5 - INVESTMENTS
The following individual investments represent 5 percent or more of the fair
value of net assets available for benefits as of December 31:
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(Amounts in dollars) 2001 2000
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Huntington Bancshares Incorporated Common Stock $177,415,635 $189,429,541
Vanguard S&P Index 500 Fund 20,270,925 19,629,273
The Plan's investments (including investments purchased, sold and held during
the year) appreciated (depreciated) in carrying value for the years ended
December 31, as follows:
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(Amounts in dollars) 2001 2000
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Huntington Bancshares Incorporated Common Stock $ 9,030,742 $(64,863,147)
Equity Mutual Funds (8,308,565) (5,664,019)
Fixed Income Mutual Funds (14,821) (40,680)
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Net appreciation (depreciation) $ 707,356 $(70,567,846)
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NOTE 6 - PARTY-IN-INTEREST TRANSACTIONS
The Plan held the following party-in-interest investments (at fair value) at
December 31:
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(Amounts in dollars) 2001 2000
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Huntington Bancshares Incorporated Common Stock $177,415,635 $189,429,541
Huntington Money Market Fund 9,304,298 7,341,091
Huntington Growth Fund 5,964,212 ---
Huntington Income-Equity Trust Fund 1,999,896 1,547,402
The Huntington Dividend Capture Fund 260,912 ---
The Huntington Mid-Corp America Fund 167,412 ---
The Huntington Fixed Income Securities Fund 135,115 ---
Huntington Rotating Index Fund 75,999 ---
The Huntington New Economy Fund 73,486 ---
Huntington International Stock Fund 20,823 ---
Costs and expenses incurred in administering the Plan paid by Huntington,
including brokerage commissions and fees in connection with each purchase of
securities, totaled $1,019,433, and $886,976 for 2001 and 2000, respectively.
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Huntington Investment and Tax Savings Plan
Schedule H, Line 4i - Schedule of Assets Held for Investment Purposes at End of Year
December 31, 2001
EIN: 31-0724920
Plan Number: 002
Identity of Issue, Borrower, Description of
Lessor or Similar Party Investment Cost Fair Value
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Common Stock:
Huntington Bancshares
Incorporated Common Stock * 10,320,863 shares $ 142,439,428 $ 177,415,635
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142,439,428 177,415,635
Mutual Funds:
Vanguard S&P Index 500 Fund 191,434 units 22,228,056 20,270,925
Vanguard Wellington Fund 441,698 units 12,563,399 12,040,679
Huntington Money Market Fund * 9,304,298 units 9,304,298 9,304,298
Franklin Small Cap Growth I Fund 201,646 units 7,025,585 6,285,291
Huntington Growth Fund * 141,634 units 6,381,543 5,964,212
T. Rowe Price Mid-Cap
Growth Fund 118,492 units 4,683,086 4,668,566
Bond Fund of America 361,183 units 4,753,108 4,619,527
Neuberger & Berman Trust Fund 285,217 units 5,111,226 4,569,181
Europacific Growth Fund 134,084 units 4,494,798 3,602,837
Janus Enterprise Fund 103,167 units 4,841,616 3,300,380
Huntington Income-Equity
Trust Fund * 58,255 units 2,164,995 1,999,896
Fidelity Low-Priced Stock Fund 28,496 units 747,053 781,356
The Huntington Dividend
Capture Fund * 25,807 units 260,931 260,912
The Huntington Mid-Corp
America Fund * 16,097 units 159,333 167,412
The Huntington Fixed Income
Securities Fund * 6,505 units 135,227 135,115
Huntington Rotating Index Fund * 8,454 units 78,073 75,999
The Huntington New
Economy Fund * 7,269 units 70,833 73,486
Huntington International
Stock Fund * 2,711 units 21,224 20,823
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85,024,384 78,140,895
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$ 227,463,812 $ 255,556,530
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Loans to Participants: $36,288 principal amount,
interest rates ranging from
6.00% to 10.00%,
maturities through 2005. --- 36,288
* Indicates party-in-interest to the Plan.
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