Exhibit 99.1
HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
Financial Statements and Supplemental Schedule
As of and for the year ended December 31, 2006 and 2005
TABLE OF CONTENTS
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Page |
Audited
Financial Statements |
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Report of Independent Registered Public Accounting Firm |
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5 |
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Statements of Net Assets Available for Benefits,
December 31, 2006 and 2005 |
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6 |
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Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 2006 and 2005 |
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7 |
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Notes to Financial Statements |
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8 |
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Supplemental
Schedule |
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Schedule H, Line 4i — Schedule of Assets (Held at End of Year),
December 31, 2006 |
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12 |
4
Report of Independent Registered Public Accounting Firm
Pension Review Committee of the Board of Directors
Huntington Bancshares Incorporated
Columbus, Ohio
We have audited the accompanying statements of net assets available for benefits of the Huntington
Investment and Tax Savings Plan (the “Plan”) as of December 31, 2006 and 2005, 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 standards of the Public Company Accounting Oversight
Board (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. The
Plan is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, 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, such financial statements present fairly, in all material respects, the net assets
available for benefits of the Plan as of December 31, 2006 and 2005, and the changes in net assets
available for benefits for the years then ended in conformity with accounting principles generally
accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements
taken as a whole. The supplemental schedule of assets (held at end of year) as of December 31,
2006, is presented for the purpose 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. This schedule is the responsibility of the Plan’s management. Such schedule has been
subjected to the auditing procedures applied in our audit of the basic 2006 financial statements
and, in our opinion, is fairly stated in all material respects when considered in relation to the
basic financial statements taken as a whole.
/s/
Deloitte & Touche LLP
Columbus, Ohio
June 27, 2007
5
HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
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December 31, |
| (Amounts in dollars) |
|
2006 |
|
2005 |
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ASSETS |
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Investments, at market value: |
|
|
|
|
|
|
|
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Huntington Bancshares Incorporated
Common Stock |
|
|
159,356,387 |
|
|
|
173,912,954 |
|
|
|
|
|
|
|
|
|
|
Mutual Funds |
|
|
228,385,699 |
|
|
|
183,251,569 |
|
|
|
|
|
|
|
|
|
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Participant Notes Receivable |
|
|
92,383 |
|
|
|
— |
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Total Investments |
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387,834,469 |
|
|
|
357,164,523 |
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Accrued dividends, interest receivable, and
other assets |
|
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1,793,175 |
|
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1,647,863 |
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|
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TOTAL ASSETS |
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389,627,644 |
|
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358,812,386 |
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LIABILITIES |
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Dividends payable to Plan participants |
|
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483,455 |
|
|
|
469,134 |
|
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|
|
|
|
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NET ASSETS AVAILABLE FOR BENEFITS |
|
$ |
389,144,189 |
|
|
$ |
358,343,252 |
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See notes to financial statements.
6
HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
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Years Ended December 31, |
| (Amounts in dollars) |
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2006 |
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2005 |
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ADDITIONS |
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Investment income: |
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Dividends on Huntington Bancshares
Incorporated Common Stock |
|
$ |
6,981,518 |
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$ |
6,392,541 |
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Dividends on mutual funds |
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12,854,366 |
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7,306,213 |
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Interest |
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638,100 |
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279,405 |
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|
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20,473,984 |
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13,978,159 |
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Contributions: |
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Employees |
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29,396,101 |
|
|
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22,438,546 |
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Employer |
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10,128,765 |
|
|
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9,389,872 |
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|
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39,524,866 |
|
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31,828,418 |
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Net appreciation (depreciation) in fair value of investments |
|
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9,510,061 |
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|
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(2,700,999 |
) |
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Total Additions |
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69,508,911 |
|
|
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43,105,578 |
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DEDUCTIONS |
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|
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|
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Benefit distributions and other withdrawals |
|
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38,707,974 |
|
|
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30,683,537 |
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|
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Total Deductions |
|
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38,707,974 |
|
|
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30,683,537 |
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Net increase in assets available for benefits |
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30,800,937 |
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12,422,041 |
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Net assets available for benefits at beginning of year |
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358,343,252 |
|
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345,921,211 |
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NET ASSETS AVAILABLE FOR BENEFITS
AT END OF YEAR |
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$ |
389,144,189 |
|
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$ |
358,343,252 |
|
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See notes to financial statements.
7
HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2006
Note 1 – Description of the Plan
The Huntington Investment and Tax Savings Plan (the “Plan”) is a defined contribution plan that was
initially adopted by the Board of Directors of Huntington Bancshares Incorporated (“Huntington”) on
September 29, 1977, to be effective January 1, 1978 to provide benefits to eligible employees of
Huntington, as defined in the Plan document. Plan participants should refer to the Plan document
for a more complete description of the Plan’s provisions. On December 13, 2000, Huntington’s
common stock held in accounts of 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.
Amendments – From time to time, the Plan has been amended and restated. The current restatement is
effective January 1, 1997, unless the restated document provides another effective date. A First
Amendment to the Plan was adopted October 16, 2002, to bring the Plan into compliance with the
Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and to effect other changes.
EGTRRA changes were generally effective January 1, 2002.
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
contributions of up to 75% 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. Participant and employer contributions are fully vested at all
times.
Investment Options – Plan participants are permitted to direct pre-tax elective deferrals and
employer matching contributions to any combination of 20 investment options, including Huntington
common stock and a variety of investment funds. Huntington has the sole discretion to determine or
change the number and nature of investment options in the Plan. An active participant may change or
suspend pre-tax elective deferrals pursuant to the terms set forth in the Plan document.
Risks and Uncertainties – The Plan utilizes various investment instruments, including mutual funds
and common stock. In general, investment securities are exposed to various risks such as interest
rate, credit, and overall market volatility. Due to the level of risk associated with certain
investment securities, it is reasonably possible that changes in the values of investment
securities will occur in the near term and that such changes will materially affect the amounts in
the financial statements.
Administration – The Plan administrator is Huntington. Portions of Plan administration have been
delegated by the Plan administrator to a committee of employees appointed by the Board of Directors
of Huntington. The Plan administrator believes that the Plan is currently designed and operated in
compliance with the applicable requirements of the Internal Revenue Code (the Code) and the
provisions of ERISA, as amended.
8
Participants are charged a fixed amount for administration of the Plan. All other administrative
fees are paid from the general assets of Huntington.
Contributions – 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 consist of shares of
Huntington common stock and mutual funds and are held 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 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. The Plan Trustee purchases and redeems shares of mutual
funds in accordance with rules of the mutual funds.
Benefit Distributions and Other 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 fair value and recorded by the Plan when payments are
made.
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. 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.
Plan participants have the option of reinvesting cash dividends paid on Huntington common stock or
having dividends paid in cash.
Participant Accounts – Each participant’s account is credited with the participant’s own
contribution and an allocation of the Company’s contribution and Plan earnings. Investment income
or loss is allocated to participant accounts based on proportional account balances. The benefit to
which a participant is entitled is the benefit that can be provided from the participant’s account.
Plan Termination – Huntington intends to continue the Plan indefinitely for the benefit of its
participants; however, it reserves the right to terminate or modify the Plan at any time by
resolution of its Board of Directors and subject to the provisions of ERISA. In the event the Plan
is terminated in the future, participants would become fully vested in their accounts.
9
Note 2 – Significant Accounting Policies
Basis of Presentation – The financial statements of the Plan are presented on the accrual basis and
are prepared in accordance with accounting principles generally accepted in the United States
(GAAP).
Dividends
and Interest Income – Dividends are recognized as of their
ex-dividend date. Interest is
recorded on an accrual basis when earned.
Valuation of Investments – Investments are accounted for at cost on the trade-date and are reported
in the Statement of Net Assets Available for Benefits at fair value. The investment in Huntington
common stock is valued using the year-end closing price as determined by NASDAQ. Mutual funds are
stated at fair value as determined by quoted market prices, which represents the net asset value of
shares held by the Plan at year end.
Use of Estimates – The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect amounts of assets and liabilities, and
changes therein, reported in the financial statements. Actual results could differ from those
estimates.
Note 3 – Investments
The following individual investments represent 5% or more of the fair value of net assets available
for benefits as of December 31:
| |
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|
|
|
|
|
|
| |
|
2006 |
|
2005 |
| |
Huntington Bancshares Incorporated Common Stock |
|
$ |
159,356,387 |
|
|
$ |
173,912,954 |
|
Vanguard Institutional Index Fund |
|
|
33,720,271 |
|
|
|
28,047,493 |
|
Vanguard Wellington Fund |
|
|
31,773,995 |
|
|
|
25,696,463 |
|
T. Rowe Price Mid-Cap Growth Fund |
|
|
28,961,221 |
|
|
|
26,736,724 |
|
American Funds Europacific Growth Fund |
|
|
20,626,860 |
|
|
|
12,302,996 |
|
Huntington Money Market Fund |
|
|
20,260,015 |
|
|
|
13,392,726 |
|
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:
| |
|
|
|
|
|
|
|
|
| |
|
2006 |
|
2005 |
| |
Huntington Bancshares Incorporated Common Stock |
|
$ |
(808,256 |
) |
|
$ |
(9,106,920 |
) |
Mutual Funds |
|
|
10,318,317 |
|
|
|
6,405,921 |
|
| |
Net appreciation (depreciation) |
|
$ |
9,510,061 |
|
|
$ |
(2,700,999 |
) |
| |
Note 4 – Party-In-Interest Transactions
Certain plan investments are shares of mutual funds managed by Huntington Asset Advisors, Inc, a
subsidiary of the Huntington National Bank and held by the Plan Trustee, and therefore, qualify as
party-in-interest investments.
10
The following table lists the fair value of party-in-interest investments at December 31:
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| |
|
2006 |
|
2005 |
| |
Huntington Bancshares Incorporated Common Stock |
|
$ |
159,356,387 |
|
|
$ |
173,912,954 |
|
Huntington Money Market Fund |
|
|
20,260,015 |
|
|
|
13,392,726 |
|
Huntington Situs Small Cap Fund |
|
|
16,698,524 |
|
|
|
16,634,730 |
|
Huntington New Economy Fund |
|
|
11,820,523 |
|
|
|
9,807,821 |
|
Huntington Income Equity Fund |
|
|
9,950,945 |
|
|
|
9,383,299 |
|
Huntington International Equity Fund |
|
|
8,873,305 |
|
|
|
4,925,513 |
|
Huntington Growth Fund |
|
|
8,690,364 |
|
|
|
8,160,734 |
|
Huntington Fixed Income Securities Fund |
|
|
7,619,949 |
|
|
|
7,775,316 |
|
Huntington Dividend Capture Fund |
|
|
6,832,350 |
|
|
|
4,914,988 |
|
Huntington Mid Corp America Fund |
|
|
5,311,380 |
|
|
|
5,177,467 |
|
Huntington Rotating Markets Fund |
|
|
3,747,601 |
|
|
|
1,553,102 |
|
Huntington Macro 100 Fund |
|
|
1,694,964 |
|
|
|
478,469 |
|
Huntington Intermediate Government Income Fund |
|
|
1,491,867 |
|
|
|
945,276 |
|
Huntington Short and Intermediate Fixed Income Fund |
|
|
1,366,374 |
|
|
|
1,138,255 |
|
Costs and expenses paid by the Plan for administration totaled $173,545 for 2006 and $224,548 for
2005.
Note 5 – Income Taxes
The Plan obtained its latest determination letter dated December 13, 2002, in which the Internal
Revenue Service stated the Plan, as then designed, was qualified under Section 401(a) of the
Internal Revenue Code (the Code) and, therefore, the related trust is exempt from taxation. Once
qualified, the Plan is required to operate in conformity with the Code to maintain its
qualification. The Plan has been amended since receiving the determination letter. However,
Huntington believes the Plan is being operated in compliance with applicable requirements of the
Code and related state statutes, and that the trust, which forms a part of the Plan, is qualified
and exempt from federal income and state franchise taxes.
Note 6 – Terminated Participants
There were no amounts included in net assets available for benefits allocated to individuals who
have withdrawn from the Plan at December 31, 2006 and 2005.
Note 7 – Unizan Financial Corp. Merger
On March 1, 2006, Huntington completed its merger with Unizan Financial Corp. (Unizan). In
preparation for the merger, Unizan terminated its defined contribution plan on February 28, 2006.
In accordance with the Plan documentation, former Unizan associates employed by Huntington subsequent
to the merger were allowed to rollover account proceeds and any existing participant loans.
Amounts were not material to the Plan.
11
Huntington Investment and Tax Savings Plan
Schedule H, Line 4i — Schedule of Assets (Held At End of Year)
December 31, 2006
EIN: 31-0724920
Plan Number: 002
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| (a) |
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(b) |
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(c) |
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(d) |
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(e) |
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Identity of Issuer, Borrower, |
|
Description of investment including maturity date, |
|
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| |
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Lessor or Similar Party |
|
rate of interest, collateral, par, or maturity value |
|
Cost |
|
Fair Value |
| |
| |
|
Common Stock: |
|
|
|
|
|
|
|
|
|
|
| * |
|
Huntington Bancshares Incorporated |
|
Huntington Bancshares
Incorporated Common Stock - 6,709,745 shares |
|
$ |
106,149,419 |
|
|
$ |
159,356,387 |
|
| |
| |
|
Total Common Stock |
|
|
|
|
106,149,419 |
|
|
|
159,356,387 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Mutual Funds: |
|
|
|
|
|
|
|
|
|
|
| |
|
Vanguard Index Funds |
|
Vanguard Institutional Index Fund - 260,208 shares |
|
|
28,238,615 |
|
|
|
33,720,271 |
|
| |
|
Vanguard Wellington Fund |
|
Vanguard Wellington Fund - 567,190 shares |
|
|
29,520,075 |
|
|
|
31,773,995 |
|
| |
|
T. Rowe Price Mid-Cap Growth Fund |
|
T. Rowe Price Mid-Cap Growth Fund - 539,415 shares |
|
|
27,253,021 |
|
|
|
28,961,221 |
|
| |
|
Europacific Growth Fund |
|
American Funds Europacific Growth Fund - 448,605 shares |
|
|
18,510,099 |
|
|
|
20,626,860 |
|
| * |
|
The Huntington Funds |
|
Huntington Money Market Fund - 20,260,015 shares |
|
|
20,260,015 |
|
|
|
20,260,015 |
|
| * |
|
The Huntington Funds |
|
Huntington Situs Small Cap Fund - 829,123 shares |
|
|
16,128,949 |
|
|
|
16,698,524 |
|
| * |
|
The Huntington Funds |
|
Huntington New Economy Fund - 736,482 shares |
|
|
11,415,523 |
|
|
|
11,820,523 |
|
| * |
|
The Huntington Funds |
|
Huntington Income Equity Fund - 319,863 shares |
|
|
10,269,976 |
|
|
|
9,950,945 |
|
| * |
|
The Huntington Funds |
|
Huntington International Equity Fund - 636,993 shares |
|
|
8,273,187 |
|
|
|
8,873,305 |
|
| * |
|
The Huntington Funds |
|
Huntington Growth Fund - 233,361 shares |
|
|
9,271,852 |
|
|
|
8,690,364 |
|
| * |
|
The Huntington Funds |
|
Huntington Fixed Income Securities Fund - 367,050 shares |
|
|
7,698,631 |
|
|
|
7,619,949 |
|
| * |
|
The Huntington Funds |
|
Huntington Dividend Capture Fund - 586,971 shares |
|
|
6,714,473 |
|
|
|
6,832,350 |
|
| |
|
T. Rowe Price Small Cap Stock Fund |
|
T. Rowe Price Small Cap Stock Fund - 186,396 shares |
|
|
6,398,305 |
|
|
|
6,348,634 |
|
| * |
|
The Huntington Funds |
|
Huntington Mid Corp America Fund - 323,273 shares |
|
|
4,916,479 |
|
|
|
5,311,380 |
|
| * |
|
The Huntington Funds |
|
Huntington Rotating Markets Fund - 281,352 shares |
|
|
3,449,529 |
|
|
|
3,747,601 |
|
| |
|
The Managers Funds |
|
Managers Special Equity Fund - 31,299 shares |
|
|
2,822,765 |
|
|
|
2,596,557 |
|
| * |
|
The Huntington Funds |
|
Huntington Macro 100 Fund - 143,156 shares |
|
|
1,676,201 |
|
|
|
1,694,964 |
|
| * |
|
The Huntington Funds |
|
Huntington Intermediate Government
Income Fund - 145,690 shares |
|
|
1,489,762 |
|
|
|
1,491,867 |
|
| * |
|
The Huntington Funds |
|
Huntington Short and Intermediate
Fixed Income Fund - 70,980 shares |
|
|
1,365,904 |
|
|
|
1,366,374 |
|
| |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total Mutual Funds |
|
|
|
|
215,673,361 |
|
|
|
228,385,699 |
|
| |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Notes Receivable from
Participants |
|
$92,383 principal amount, interest rates of 6.00% - 9.50%; maturing in 2007-2011. |
|
$ |
92,383 |
|
|
$ |
92,383 |
|
| |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total Investments |
|
|
|
$ |
321,915,163 |
|
|
$ |
387,834,469 |
|
| |
|
|
|
| * |
|
Indicates party-in-interest to the Plan. |
12