SecProbe.io

CORRESP
1
filename1.htm

Correspondence

May 20, 2010

Michael Clampitt

Senior Attorney

Division of Corporate Finance

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

    Re:

    Huntington Bancshares Incorporated

    File No. 001-34073

    Form 10-K for the fiscal year ended December 31, 2009, filed February 18, 2010

    Schedule 14A, filed February 26, 2010

Dear Mr. Clampitt:

This letter is in response to your letter, dated April 12, 2010, regarding the Securities and
Exchange Commission Staff’s review of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2009, and our Schedule 14A filed on February 26, 2010, relating to our 2010 Annual
Meeting which was held on April 22, 2010. For your convenience, we have included your comments
below and have keyed our responses accordingly.

In some of our responses, we have agreed to change or supplement the disclosures in our future
filings. While we believe that these changes will improve our future disclosures, we do not
believe our prior filings are materially deficient or inaccurate.

Form 10-K for the Fiscal Year ended December 31, 2009

Business, page 1

    1.

    We noted that more than nine of the ten pages of this section are devoted to a largely
generic discussion of regulatory matters and less than one page is devoted to other disclosure
about your business. Please provide to us and undertake to include in your future filings,
the detailed disclosure required by Item 101 of Regulation S-K including, but not limited to,
discussion of the following:

    •

    the general development of the business during the past five years as required by Item
101(a) including

    •

    the Franklin Loans Restructuring Transaction including the benefits and detriments
to you, including how it affected your financial condition;

    •

    a description of the investment by the U.S. government of $1.4 billion in your
preferred stock pursuant to the Troubled Asset Relief Program (“TARP”), the key reasons
you applied to the Federal government for this assistance and the percentage of your
stock owned by the federal government; and

    •

    a narrative description of your business as required by Item 101(c).

We note your reference in the third paragraph to the MD&A and financial statements; please
delete your reference to your Annual Report to shareholders.

- 1 -

Management’s response

We believe that we have complied with the detailed disclosure requirements of Item 101 of
Regulation S-K in our Form 10-K.  These disclosures, however, are not all included in the first
few pages of part I of our Form 10-K. The overview paragraphs immediately under Item 1.
Business, include the year we were organized, our form of organization, the number of employees,
and a summary description of our business, products, services, geographic markets, and
competition. These overview paragraphs also provide references to the discussion of, and
financial results for, our business segments.

The narrative discussion of our business segments, as required by Item 101(c) of Regulation S-K,
begins on page 105 of our Form 10-K and includes a more fulsome discussion of the business done
or intended to be done by us, including our principal products, markets, and methods of
distribution, as well as any impact of seasonality, as they relate to each of our business
segments. The financial results for each of these business segments are included in Note 27 of
our consolidated financial statements beginning on page 199 of our Form 10-K.

Our material acquisitions over the past five years are described in Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations on pages 33-34 of our
Form 10-K. Our capital, which impacts the entire company rather than just a specific segment,
is discussed under the caption “Capital/Capital Adequacy” on pages 100-105. A discussion of raw
materials, intellectual property, dependence on a single or few customers, backlog orders,
government contracts, research and development, compliance with governmental regulations
regarding the environment, and any other matters specified in Item 101 in general, and Item
101(c) in particular, are not discussed in our Form 10-K either because they are not relevant or
are not material to our business.

As a diversified financial holding company, we are highly regulated – and these regulations are
changing at an increasing pace due to the impact of the sustained economic weakness on our
industry. We feel that it is very important for our shareholders, over a third of whom are
retail (rather than institutional) investors, to understand the very significant impact of the
regulatory structure on our operations. We have attempted to organize the “Regulatory Matters”
section of our Form 10-K to provide sufficient general information about each regulatory topic
such that our shareholders will have the framework to understand the specific information we
provide as to the impact on us, when this impact is known. For example, we have described
generally the “Emergency Economic Stabilization Act of 2008” in the first two paragraphs under
that caption on page 3 of our Form 10-K and then described the specific impact to us in the
third paragraph under that same caption. Similarly, we described generally the Transaction
Account Guaranty Program in the first paragraph under the caption “Federal Deposit Insurance
Corporation” on page 4 of our Form 10-K and then, in the second paragraph under that caption,
provided information about the notes we issued in 2009 that were guaranteed by the FDIC under
that program. Thus, we do not believe that the 8 pages of regulatory-related disclosures made
in our Form 10-K are strictly generic.

Significant legislation affecting the financial industry was adopted in 2008 and 2009 and we
expect additional legislation with the potential to materially impact us will be adopted in
2010. Regulation implementing this legislation is ongoing. In those cases where we have not
been able to assess the impact these developments will have on us, we have summarized the new or
pending legislation and then indicated that we are monitoring developments. Although some of
these disclosures may appear to be more generic than others, we want our shareholders to know
what may be on the horizon that could impact our operations in the future.

- 2 -

Moreover, we believe that our Form 10-K already includes the detailed disclosures required by
Item 101, to the extent applicable and relevant to our business, including appropriate
disclosures about the Franklin Credit Management Corporation loan restructuring transaction and
the investment by the US Department of Treasury in our preferred stock under the Troubled Asset
Relief Program.

Franklin and the related loan restructuring transaction was described in our MD&A and
consolidated financial statements on pages 31-32 and 148-150, respectively, of our Form 10-K.
In addition, references to Franklin’s impact on our financial condition are made throughout our
MD&A, including the following:

    Section

    Page

    Management Discussion and Analysis:

    Critical Accounting Policies and Use of Significant Estimates

    25

    Acquisitions

    33

    Discussion of Results of Operations – Summary

    37 and 38

    Significant Items Influencing Financial Performance Comparisons

    40 and 41

    Net Interest Income / Average Balance Sheet

    43

    Provision for Credit Losses

    48

    Noninterest Expense

    54

    Provision for Income Taxes

    55

    Credit Exposure Mix

    58

    Commercial Loan Portfolio Reviews and Actions

    60

    Franklin Relationship

    68

    Nonaccrual Loans

    72 – 77

    Allowances for Credit Losses

    77 – 81

    Net Charge-Offs

    81 – 83

    Tier 1 Common Equity

    101

    Business Segment Discussion

    106 and 112

    Results for the Fourth Quarter

    119 – 124

    Notes to Consolidated Financial Statements

    Accounting Standards Update

    145

    Allowances for Credit Losses

    159

    Other Long-Term Debt

    162

    Variable Interest Entities

    191

    Commitments and Contingencies

    194 – 195

As previously indicated, we disclosed the investment by the US Department of Treasury in our
preferred stock under TARP on pages 3 and 4 of our Form 10-K. We originally participated in the
voluntary capital purchase program under TARP at the request of the Department of Treasury and
other regulators. We were told by these regulators at that time that only the strongest
financial institutions would be permitted to participate in this program. The non-voting
cumulative preferred stock issued to the Department of Treasury represented 25% of our total
capital, as of December 31, 2009.

Although we believe that our 2009 Form 10-K already includes all material disclosures required
by Item 101 of Regulation S-K, we will include in future filings a more robust summary earlier
in the document with references to the location of more detailed information elsewhere in the
document. Also, in future filings, we will include additional information regarding our
participation in TARP
(see our response to your comment 6 below) and we will delete the reference to our annual report
to shareholders when referring to our MD&A and consolidated financial statements.

- 3 -

    2.

    Please provide to us and undertake to include in your future filings, revision of the first
paragraph to clarify the principal products produced and services rendered by you, as required
by Item 101(c)(1)(i), including but not limited to your principal loans are commercial real
estate loans, residential real estate loans including home equity loans, commercial and
industrial loans and automobile loans and leases.

Management’s response

The first paragraph under Item 1. Business was intended to be only a summary of our principal
products and services. Additional detail about our loan products was included on pages 57-58
of our MD&A. The information required by Item 101(c)(i) of Regulation S-K as to the principal
products produced and services rendered for each of our business segments was included in our
Form 10-K as follows: Retail and Business Banking on page 108; Commercial Banking on page 111;
Commercial Real Estate on page 113; Auto Finance and Dealer Services on page 114; and Private
Financial Group on page 116.

In future filings, we will provide references to the location of more detailed information
regarding our principal products produced and services rendered by our business segments
elsewhere in the document.

    3.

    Please provide to us and undertake to include in your future filings revision of this section
to describe the business done and intended to be done by you, as required by Item 101(c)(1) of
Regulation S-K, including, but not limited to, the following:

    •

    address any changes in your business as a result of the recession and your financial
condition including drops in loans and deposits, increases in defaults and foreclosures;

    •

    discuss your reliance on borrowings from the federal government, including the TARP
program and guarantees from the federal government;

    •

    discuss your relationship and transactions with Franklin Credit Management Corporation
and your acquisition of collateral for loans you had made to Franklin consisting of
subprime loans and real estate that Franklin had acquired on loans that had defaulted;

    •

    discuss your acquisitions including Sky Financial and Warren Bank; and

    •

    briefly describe any changes in policies and/or programs to prevent or minimize
foreclosures, modify mortgages, any changes in the standards you use to extend credit and
any changes in the number or amounts of loans you originate.

Management’s response

As indicated above, the narrative discussion of our business segments, as required by Item
101(c) of Regulation S-K, begins on page 105 of our Form 10-K and includes a more fulsome
discussion of the business done or intended to be done by us. We believe that our Form 10-K
already includes a description of the matters to which you refer in Item 3 of your letter.
Specifically:

    •

    We addressed changes in our business as a result of the weakened economy throughout our
Form 10-K. During 2009, we actually experienced an increase in our deposits as described
in our MD&A on pages 94 and 95 in connection with our liquidity discussion. The impact of
the
weakened economy on our loans as well as an extensive discussion of defaults and
foreclosures was included in our “Credit Risk” section of the MD&A on pages 56-84.

- 4 -

    •

    We described our borrowings from the federal government, including the TARP program and
advances from the Federal Reserve Bank and the Federal Home Loan Bank of Cincinnati in the
“Liquidity Risk” section of our MD&A, specifically on pages 95 and 97. In addition, these
federal programs were described in our “Regulatory Matters” section on pages 3-5 of our
Form 10-K.

    •

    We fully disclosed our relationship and transactions with Franklin in our MD&A and
consolidated financial statements on pages 31-32 and 148-150, respectively, of our Form
10-K and on page 40, where Franklin was identified as one of the “Significant
Items Influencing Financial Performance Comparisons”. In addition, as previously
mentioned, the impact of Franklin on our financial performance was included throughout the
MD&A and was highlighted in Table 10 (Provision for Credit Losses), Table 25
(Franklin-Related Loans and OREO balances), Table 29 (NALs/NPAs – Franklin-Related Impact),
Table 33 (ALLL/ACL – Franklin-Related Impact), and Table 36 (NCOs – Franklin-Related
Impact). Note 5 of the Notes to Consolidated Financial Statements provided additional
information about the Franklin restructuring transaction.

    •

    We described our acquisitions, including Sky Financial Group, Inc., and our methodology
for quantifying the impact on our financial condition in our MD&A on pages 33-34. Our
acquisition of approximately $410 million in deposits from Warren Bank on October 2, 2009,
was less than 1% of our total deposits at December 31, 2009. Therefore, although mentioned
in Note 4 to our consolidated financial statements, our acquisition of Warren Bank’s
deposits was not included in our MD&A with the discussion of our Sky and Unizan Financial
Corp. acquisitions, both of which involved billions in loans and deposits, because
management does not believe the Warren Bank deposit acquisition is material.

    •

    The “Credit Risk” section of our MD&A on pages 56-84 describes in detail our portfolio
management process, and the changes to that process implemented during 2009, involving each
business segment in order to provide an improved view of emerging risk issues at a borrower
level, enhanced ongoing monitoring capabilities, and strengthened actions and timeliness to
mitigate emerging loan risks.

In future filings, we will provide references to the location of this information.

    4.

    Please provide us and undertake to include in your future filings, a detailed discussion of
recent and current economic conditions in your market area affecting your business including
but not limited to the following:

    •

    trends over the past three years in home price index, residential real estate sales and
single family and multifamily building permits in your market area;

    •

    trends over the past three years in commercial real estate prices, commercial real
estate sales and commercial building permits in your market areas;

    •

    trends over the past three years in the unemployment rate in your market area; and

    •

    trends over the past three years in median household income.

- 5 -

Management’s response

The section of our MD&A captioned “Credit Risk” on pages 56-84, already includes a detailed
discussion of