Quarterly report pursuant to Section 13 or 15(d)

Variable Interest Entities

Variable Interest Entities
6 Months Ended
Jun. 30, 2011
Variable Interest Entities [Abstract]  
15. VIEs
Consolidated VIEs
Consolidated VIEs at June 30, 2011, consisted of the Franklin 2009 Trust and certain loan securitization trusts. Loan securitizations include automobile loan and lease securitization trusts formed in 2009, 2008, and 2006. Huntington has determined the trusts are VIEs. Huntington has concluded that it is the primary beneficiary of these trusts because it has the power to direct the activities of the entity that most significantly affect the entity’s economic performance and it has either the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE.
The carrying amount and classification of the trusts’ assets and liabilities included in the Unaudited Condensed Consolidated Balance Sheet are as follows:
    June 30, 2011  
(dollar amounts in thousands)   2009 Trust     2009 Trust     2008 Trust     2006 Trust     Total  
  $     $ 23,767     $ 17,097     $ 62,862     $ 103,726  
Loans and leases
          400,935       201,795       928,688       1,531,418  
Allowance for loan and lease losses
                (1,796 )     (8,265 )     (10,061 )
Net loans and leases
          400,935       199,999       920,423       1,625,083  
Accrued income and other assets
    1,588       1,839       839       3,694       7,960  
Total assets
  $ 1,588     $ 426,541     $ 217,935     $ 986,979     $ 1,736,769  
Other long-term debt
  $     $ 231,017     $ 67,142     $ 581,944     $ 880,103  
Accrued interest and other liabilities
    1,096       480       131       123       1,830  
Total liabilities
  $ 1,096     $ 231,497     $ 67,273     $ 582,067     $ 881,933  
Trust-Preferred Securities
Huntington has certain wholly-owned trusts whose assets, liabilities, equity, income, and expenses are not included within Huntington’s Unaudited Condensed Consolidated Financial Statements. These trusts have been formed for the sole purpose of issuing trust-preferred securities, from which the proceeds are then invested in Huntington junior subordinated debentures, which are reflected in Huntington’s Unaudited Condensed Consolidated Balance Sheet as subordinated notes. The trust securities are the obligations of the trusts, and as such, are not consolidated within Huntington’s Unaudited Condensed Consolidated Financial Statements. A list of trust-preferred securities outstanding at June 30, 2011, follows:
            Principal amount of     Investment in  
            subordinated note/     unconsolidated  
(dollar amounts in thousands)   Rate     debenture issued to trust (1)     subsidiary (2)  
Huntington Capital I
    0.97 %(3)   $ 138,816     $ 6,186  
Huntington Capital II
    0.87 (4)     55,093       3,093  
Huntington Capital III
    6.69       114,086       10  
BancFirst Ohio Trust Preferred
    8.54       23,220       619  
Sky Financial Capital Trust I
    8.56       64,333       1,856  
Sky Financial Capital Trust II
    3.22 (5)     30,929       929  
Sky Financial Capital Trust III
    1.65 (6)     77,320       2,320  
Sky Financial Capital Trust IV
    1.70 (6)     77,320       2,320  
Prospect Trust I
    3.53 (7)     6,186       186  
          $ 587,303     $ 17,519  
(1)   Represents the principal amount of debentures issued to each trust, including unamortized original issue discount.
(2)   Huntington’s investment in the unconsolidated trusts represents the only risk of loss.
(3)   Variable effective rate at June 30, 2011, based on three month LIBOR + 0.70.
(4)   Variable effective rate at June 30, 2011, based on three month LIBOR + 0.625.
(5)   Variable effective rate at June 30, 2011, based on three month LIBOR + 2.95.
(6)   Variable effective rate at June 30, 2011, based on three month LIBOR + 1.40.
(7)   Variable effective rate at June 30, 2011, based on three month LIBOR + 3.25.
Each issue of the junior subordinated debentures has an interest rate equal to the corresponding trust securities distribution rate. Huntington has the right to defer payment of interest on the debentures at any time, or from time-to-time for a period not exceeding five years, provided that no extension period may extend beyond the stated maturity of the related debentures. During any such extension period, distributions to the trust securities will also be deferred and Huntington’s ability to pay dividends on its common stock will be restricted. Periodic cash payments and payments upon liquidation or redemption with respect to trust securities are guaranteed by Huntington to the extent of funds held by the trusts. The guarantee ranks subordinate and junior in right of payment to all indebtedness of the Company to the same extent as the junior subordinated debt. The guarantee does not place a limitation on the amount of additional indebtedness that may be incurred by Huntington.
Low Income Housing Tax Credit Partnerships
Huntington makes certain equity investments in various limited partnerships that sponsor affordable housing projects utilizing the Low Income Housing Tax Credit (LIHTC) pursuant to Section 42 of the Internal Revenue Code. The purpose of these investments is to achieve a satisfactory return on capital, to facilitate the sale of additional affordable housing product offerings, and to assist in achieving goals associated with the Community Reinvestment Act. The primary activities of the limited partnerships include the identification, development, and operation of multi family housing that is leased to qualifying residential tenants. Generally, these types of investments are funded through a combination of debt and equity.
Huntington does not have the power to direct the activities of these VIEs that most significantly affect their economic performance and is not the primary beneficiary. Huntington uses the equity method to account for the majority of its investments in these entities. These investments are included in accrued income and other assets. At June 30, 2011, December 31, 2010, and June 30, 2010, Huntington had commitments of $326.9 million, $316.0 million, and $232.9 million, respectively, of which $279.0 million, $260.1 million, and $222.5 million, respectively, were funded. The unfunded portion is included in accrued expenses and other liabilities.