CALCULATION
OF REGISTRATION FEE
Maximum
Amount
Aggregate
of
Title of
Each Class of
Offering
Registration
Securities
to be Registered
Price(1)
Fee(2)
8.50% Series A Non-Cumulative Perpetual Convertible
Preferred Stock, par value $0.01 per share and liquidation
preference $1,000 per share
$
575,000,000
$
22,598
(1)
Includes
shares of preferred stock to be sold upon exercise of the
underwriters’ option to purchase additional shares. See
“Underwriting.”
(2)
A filing fee
of $22,598 has been calculated in accordance with
Rule 457(r) of the Securities Act of 1933. Pursuant to
Rule 457(p) under the Securities Act of 1933, unutilized
registration fees of $3,914.59 remain from the $88,275 that was
paid with respect to unsold securities that were previously
registered pursuant to Registration Statement
No. 333-126899
and have been carried forward. The first $3,914.59 of the
$22,598 registration fee for this offering is offset against
those unutilized registration fees, leaving a remaining
registration fee of $18,683.41.
Filed
pursuant to Rule 424(b)(2)
Registration
No. 333-131143
Prospectus
Supplement to Prospectus dated March 25, 2008
500,000
Shares
8.50%
Series A Non-Cumulative Perpetual
Convertible
Preferred Stock
Huntington
Bancshares Incorporated is offering 500,000 shares of our
8.50% Series A Non-Cumulative Perpetual Convertible
Preferred Stock, which we refer to as the Preferred Stock.
Dividends on
the Preferred Stock will be payable quarterly in arrears, when,
as and if authorized by our board of directors and declared by
us, at an annual rate of 8.50% per year on the liquidation
preference of $1,000 per share. The dividend payment dates will
be the fifteenth day of each January, April, July and October,
commencing on July 15, 2008, or the next business day if
any such day is not a business day.
Dividends on
the Preferred Stock will be non-cumulative. If for any reason
our board of directors does not authorize and we do not declare
full cash dividends on the Preferred Stock for a quarterly
dividend period, we will have no obligation to pay any dividends
for that period, whether or not our board of directors
authorizes and we declare dividends on the Preferred Stock for
any subsequent dividend period. However, with certain limited
exceptions, if we have not declared and paid or set aside for
payment full quarterly dividends on the Preferred Stock for a
particular dividend period, we may not declare or pay dividends
on, or redeem, purchase or acquire, our common stock or other
junior securities during the next succeeding dividend period.
Each share
of the Preferred Stock may be converted at any time, at the
option of the holder, into 83.6680 shares of our common
stock (which reflects an approximate initial conversion price of
$11.95 per share of our common stock) plus cash in lieu of
fractional shares, subject to anti-dilution adjustments. The
conversion rate will be adjusted as described herein upon the
occurrence of certain make-whole acquisition transactions and
other events.
The
Preferred Stock is not redeemable by us at any time. On or after
April 15, 2013, if the closing price of our common stock
exceeds 130% of the conversion price for 20 trading days during
any 30 consecutive trading day period, including the last
trading day of such period, ending on the trading day preceding
the date we give notice of mandatory conversion, we may at our
option cause some or all of the Preferred Stock to be
automatically converted into common stock at the then prevailing
conversion rate.
Our common
stock is listed on the NASDAQ Global Select Market under the
symbol “HBAN”. The NASDAQ Official Closing Price of
our common stock on April 16, 2008 was $9.96 per share.
The shares
of the Preferred Stock are not savings accounts, deposits or
other obligations of any bank and are not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other
government agency.
Investing
in the shares of the Preferred Stock involves risks. See
“Risk Factors” beginning on
page S-7
of this prospectus supplement and “Risk Factors”
beginning on page 10 of our Annual Report on
Form 10-K
for the year ended December 31, 2007.
Per
Share
Total
Price to the public
$
1,000
$
500,000,000
Underwriting discounts and commissions
$
30
$
15,000,000
Proceeds to Huntington Bancshares (before expenses)
$
970
$
485,000,000
We have
granted the underwriters an option exercisable for 30 days
after the date of this prospectus supplement, to purchase, from
time to time, in whole or in part, up to an aggregate of
75,000 shares of Preferred Stock to the extent the
underwriters sell more than 500,000 shares of Preferred
Stock in this offering.
Neither
the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus supplement or
the accompanying prospectus. Any representation to the contrary
is a criminal offense.
The
underwriters expect to deliver the shares of the Preferred Stock
against payment in New York, New York on or about April 22,
2008.
Joint
Book-Running Managers
MORGAN
STANLEY
LEHMAN BROTHERS
Co-Managers
Wachovia Securities
The Huntington Investment
Company
SunTrust Robinson
Humphrey
April 16,
2008.
CALCULATION
OF REGISTRATION FEE
|
Maximum
|
Amount
|
|||||||||
|
Aggregate
|
of
|
|||||||||
|
Title of
Each Class of
|
Offering
|
Registration
|
||||||||
| Securities to be Registered | Price(1) | Fee(2) | ||||||||
| 8.50% Series A Non-Cumulative Perpetual Convertible Preferred Stock, par value $0.01 per share and liquidation preference $1,000 per share | $ | 575,000,000 | $ | 22,598 | ||||||
| (1) | Includes shares of preferred stock to be sold upon exercise of the underwriters’ option to purchase additional shares. See “Underwriting.” | |
| (2) | A filing fee of $22,598 has been calculated in accordance with Rule 457(r) of the Securities Act of 1933. Pursuant to Rule 457(p) under the Securities Act of 1933, unutilized registration fees of $3,914.59 remain from the $88,275 that was paid with respect to unsold securities that were previously registered pursuant to Registration Statement No. 333-126899 and have been carried forward. The first $3,914.59 of the $22,598 registration fee for this offering is offset against those unutilized registration fees, leaving a remaining registration fee of $18,683.41. |
Filed
pursuant to Rule 424(b)(2)
Registration
No. 333-131143
Prospectus
Supplement to Prospectus dated March 25, 2008
500,000
Shares
8.50%
Series A Non-Cumulative Perpetual
Convertible
Preferred Stock
Huntington
Bancshares Incorporated is offering 500,000 shares of our
8.50% Series A Non-Cumulative Perpetual Convertible
Preferred Stock, which we refer to as the Preferred Stock.
Dividends on
the Preferred Stock will be payable quarterly in arrears, when,
as and if authorized by our board of directors and declared by
us, at an annual rate of 8.50% per year on the liquidation
preference of $1,000 per share. The dividend payment dates will
be the fifteenth day of each January, April, July and October,
commencing on July 15, 2008, or the next business day if
any such day is not a business day.
Dividends on
the Preferred Stock will be non-cumulative. If for any reason
our board of directors does not authorize and we do not declare
full cash dividends on the Preferred Stock for a quarterly
dividend period, we will have no obligation to pay any dividends
for that period, whether or not our board of directors
authorizes and we declare dividends on the Preferred Stock for
any subsequent dividend period. However, with certain limited
exceptions, if we have not declared and paid or set aside for
payment full quarterly dividends on the Preferred Stock for a
particular dividend period, we may not declare or pay dividends
on, or redeem, purchase or acquire, our common stock or other
junior securities during the next succeeding dividend period.
Each share
of the Preferred Stock may be converted at any time, at the
option of the holder, into 83.6680 shares of our common
stock (which reflects an approximate initial conversion price of
$11.95 per share of our common stock) plus cash in lieu of
fractional shares, subject to anti-dilution adjustments. The
conversion rate will be adjusted as described herein upon the
occurrence of certain make-whole acquisition transactions and
other events.
The
Preferred Stock is not redeemable by us at any time. On or after
April 15, 2013, if the closing price of our common stock
exceeds 130% of the conversion price for 20 trading days during
any 30 consecutive trading day period, including the last
trading day of such period, ending on the trading day preceding
the date we give notice of mandatory conversion, we may at our
option cause some or all of the Preferred Stock to be
automatically converted into common stock at the then prevailing
conversion rate.
Our common
stock is listed on the NASDAQ Global Select Market under the
symbol “HBAN”. The NASDAQ Official Closing Price of
our common stock on April 16, 2008 was $9.96 per share.
The shares
of the Preferred Stock are not savings accounts, deposits or
other obligations of any bank and are not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other
government agency.
Investing
in the shares of the Preferred Stock involves risks. See
“Risk Factors” beginning on
page S-7
of this prospectus supplement and “Risk Factors”
beginning on page 10 of our Annual Report on
Form 10-K
for the year ended December 31, 2007.
| Per Share | Total | |||||||
|
Price to the public |
$ | 1,000 | $ | 500,000,000 | ||||
|
Underwriting discounts and commissions |
$ | 30 | $ | 15,000,000 | ||||
|
Proceeds to Huntington Bancshares (before expenses) |
$ | 970 | $ | 485,000,000 | ||||
We have
granted the underwriters an option exercisable for 30 days
after the date of this prospectus supplement, to purchase, from
time to time, in whole or in part, up to an aggregate of
75,000 shares of Preferred Stock to the extent the
underwriters sell more than 500,000 shares of Preferred
Stock in this offering.
Neither
the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus supplement or
the accompanying prospectus. Any representation to the contrary
is a criminal offense.
The
underwriters expect to deliver the shares of the Preferred Stock
against payment in New York, New York on or about April 22,
2008.
Joint
Book-Running Managers
| MORGAN STANLEY | LEHMAN BROTHERS |
Co-Managers
| Wachovia Securities |
| The Huntington Investment Company |
| SunTrust Robinson Humphrey |
April 16,
2008.
TABLE OF
CONTENTS
| Page | ||||
|
Prospectus Supplement |
||||
| S-1 | ||||
| S-9 | ||||
| S-15 | ||||
| S-16 | ||||
| S-17 | ||||
| S-18 | ||||
| S-19 | ||||
| S-20 | ||||
| S-35 | ||||
| S-36 | ||||
| S-38 | ||||
| S-40 | ||||
| S-44 | ||||
| S-49 | ||||
|
Prospectus |
||||
| 1 | ||||
| 3 | ||||
| 4 | ||||
| 4 | ||||
| 5 | ||||
| 5 | ||||
| 5 | ||||
| 6 | ||||
| 6 | ||||
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this
prospectus supplement. You must not rely on any unauthorized
information or representations. This prospectus supplement is an
offer to sell only the Preferred Stock offered hereby, but only
under circumstances and in jurisdictions where it is lawful to
do so. The information contained in this prospectus supplement
is current only as of its date.
S-i
Table of Contents
ABOUT THIS
PROSPECTUS SUPPLEMENT
This document consists of two parts. The first part is the
prospectus supplement, which describes the specific terms of the
offering. The second part is the prospectus, which describes
more general information, some of which may not apply to the
offering. You should read both this prospectus supplement and
the accompanying prospectus, together with additional
information described under the heading “Where You Can Find
More Information” in the accompanying prospectus.
All references in this prospectus supplement to
“
Huntington
,” “
we
,”
“
us
,” “
our
” or similar
references mean Huntington Bancshares Incorporated and its
successors, and include our consolidated subsidiaries where the
context so requires. When we refer to the
“
Bank
” in this prospectus supplement, we mean
The Huntington National Bank, our only bank subsidiary.
If the information set forth in this prospectus supplement
differs in any way from the information set forth in the
accompanying prospectus, you should rely on the information set
forth in this prospectus supplement.
Currency amounts in this prospectus supplement are stated in
U.S. dollars.
You should rely only on the information contained in or
incorporated by reference into this prospectus supplement. This
prospectus supplement may be used only for the purpose for which
it has been prepared. No one is authorized to give information
other than that contained in this prospectus supplement and in
the documents referred to in this prospectus supplement and
which are made available to the public. We have not, and the
underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with
different or inconsistent information, you should not rely
on it.
We are not, and the underwriters are not, making an offer to
sell these securities in any jurisdiction where the offer or
sale is not permitted. You should not assume that the
information appearing in this prospectus supplement or any
document incorporated by reference is accurate as of any date
other than the date of the applicable document. Our business,
financial condition, results of operations and prospects may
have changed since that date. Neither this prospectus supplement
nor the accompanying prospectus constitutes an offer, or an
invitation on our behalf or on behalf of the underwriters, to
subscribe for and purchase, any of the securities and may not be
used for or in connection with an offer or solicitation by
anyone, in any jurisdiction in which such an offer or
solicitation is not authorized or to any person to whom it is
unlawful to make such an offer or solicitation.
S-ii
Table of Contents
FORWARD-LOOKING
STATEMENTS
This prospectus supplement and the accompanying prospectus
contain or incorporate statements that we believe are
“forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Rule 175 promulgated thereunder, and Section 21E of
the Securities Exchange Act of 1934, as amended (the
“
Exchange Act
”), and
Rule 3b-6
promulgated thereunder. These statements relate to our financial
condition, results of operations, plans, objectives, future
performance or business. They usually can be identified by the
use of forward-looking language such as “will likely
result,” “may,” “are expected to,”
“is anticipated,” “estimate,”
“forecast,” “projected,” “intends
to,” or may include other similar words or phrases such as
“believes,” “plans,” “trend,”
“objective,” “continue,” “remain,”
or similar expressions, or future or conditional verbs such as
“will,” “would,” “should,”
“could,” “might,” “can,” or
similar verbs. You should not place undue reliance on these
statements, as they are subject to risks and uncertainties,
including but not limited to those described in this prospectus
supplement, the accompanying prospectus or the documents
incorporated by reference, including the risk factors set forth
in our most recent Annual Report on
Form 10-K.
When considering these forward-looking statements, you should
keep in mind these risks and uncertainties, as well as any
cautionary statements we may make. Moreover, you should treat
these statements as speaking only as of the date they are made
and based only on information then actually known to us.
There are a number of important factors that could cause future
results to differ materially from historical performance and
these forward-looking statements. Factors that might cause such
a difference include, but are not limited to:
| • | competitive pressures on product pricing and services and financial institutions generally; | |
| • | changes in the interest rate environment may reduce interest margins; | |
| • | prepayment rates, loan originations and sale volumes, charge-offs and loan loss provisions are inherently uncertain; | |
| • | deterioration in our loan portfolio could be worse than expected due to a number of factors such as the underlying value of the collateral could prove less valuable than otherwise assumed and assumed cash flows may be worse than expected; | |
| • | general economic conditions, either nationally or in the states in which we do business, may be less favorable than expected; | |
| • | political developments, wars or other hostilities may disrupt or increase volatility in securities markets or otherwise affect economic conditions; | |
| • | changes and trends in the capital markets; | |
| • | the nature, extent and timing of legislative or regulatory changes, reforms or actions, or significant litigation, may adversely affect the businesses in which we are engaged; | |
| • | our ability to maintain favorable ratings from rating agencies; | |
| • | effects of critical accounting policies and judgments; | |
| • | changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies; | |
| • | fluctuation of our stock price; | |
| • | ability to attract and retain our key personnel; | |
| • | ability to receive dividends from our subsidiaries; | |
| • | potential dilutive effect of future acquisitions on current stockholders’ ownership of Huntington; | |
| • | the businesses of Huntington and that of any pending or approved acquisition may not be integrated successfully or such integration may take longer to accomplish than expected; |
S-iii
Table of Contents
| • | the expected cost savings and any revenue synergies from acquisitions may not be fully realized within the expected timeframes; | |
| • | disruption from acquisitions may make it more difficult to maintain relationships with clients, associates, or suppliers; | |
| • | the required governmental approvals of acquisitions may not be obtained on the proposed terms and schedule; | |
| • | if required by an acquisition, Huntington and/or the stockholders of any pending or approved acquisition may not approve the acquisition; | |
| • | success and timing of other business strategies; | |
| • | extended disruption of vital infrastructure; | |
| • | ability to secure confidential information through the use of computer systems and telecommunications network; and | |
| • | the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity. |
You should refer to our periodic and current reports filed with
the Securities and Exchange Commission, or
“
SEC
,” for further information on other factors
which could cause actual results to be significantly different
from those expressed or implied by these forward-looking
statements. See “Where You Can Find More Information”
in the accompanying prospectus.
S-iv
Table of Contents
SUMMARY
This summary highlights information contained elsewhere in, or
incorporated by reference into, this prospectus supplement. As a
result, it does not contain all of the information that may be
important to you or that you should consider before investing in
the Preferred Stock. You should read this entire prospectus
supplement and accompanying prospectus, including the “Risk
Factors” section and the documents incorporated by
reference, which are described under “Where You Can Find
More Information” in the accompanying prospectus.
Huntington
Bancshares Incorporated
Huntington Bancshares Incorporated is a multi-state diversified
financial holding company organized under Maryland law in 1966
and headquartered in Columbus, Ohio. Through our subsidiaries,
including our bank subsidiary, The Huntington National Bank,
organized in 1866, we provide full-service commercial and
consumer banking services, mortgage banking services, automobile
financing, equipment leasing, investment management, trust
services, brokerage services, reinsurance of private mortgage
insurance, reinsurance of credit life and disability insurance,
retail and commercial insurance agency services and other
financial products and services. Our banking offices are located
in Ohio, Michigan, Pennsylvania, Indiana, West Virginia and
Kentucky. Selected financial service activities are also
conducted in other states including: Dealer Sales 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. Sky Insurance offers retail and commercial insurance
agency services in Ohio, Pennsylvania and Indiana. International
banking services are available through the headquarters office
in Columbus and limited purpose offices located in both the
Cayman Islands and Hong Kong.
At March 31, 2008, Huntington had, on a consolidated basis,
total assets of $56.1 billion, total deposits of
$38.1 billion and stockholders’ equity of
$5.9 billion.
Our common stock is traded on the NASDAQ Global Select Market
under the ticker symbol “HBAN”. Huntington’s
principal executive office is located at Huntington Center, 41
South High Street, Columbus, Ohio 43287, telephone number:
(614) 480-8300.
Recent
Developments
On April 15, 2008, Huntington reported its operating
results for the three months ended March 31, 2008. The
following presents an overview of those operating results.
Our net income for the quarter was $127.1 million, or $0.35
per share of common stock, compared with earnings in the
year-ago first quarter of $95.7 million, or $0.40 per share
of common stock.
Huntington also revised its 2008 full-year reported earnings
target to $1.45-$1.50 per common share, down from the previously
targeted amount of $1.57-$1.62 per common share. The reduction
primarily reflects a combination of assumption changes including
a lower net interest margin, a higher provision for loan and
lease losses, and the impact of the planned issuance of the
Preferred Stock.
In addition, we announced that our board of directors has
declared a quarterly cash dividend on our common stock of
$0.1325 per share of common stock payable July 1, 2008, to
shareholders of record on June 13, 2008. This represents a
50% reduction from the previous quarterly cash dividend of
$0.265 per share of common stock.
Performance compared with the 2007 fourth quarter included:
| • | Net income of $0.35 per common share, compared with a net loss of $0.65 per common share. |
S-1
Table of Contents
| • | Current quarter earnings were positively impacted by $0.03 per common share reflecting the benefits of a gain from the Visa ® IPO, the partial reversal of the 2007 fourth quarter Visa ® indemnification charge, and a favorable tax benefit from the reduction of a previously established deferred tax valuation allowance, partially offset by net market-related losses, asset impairment, and merger costs. The 2007 fourth quarter net loss reflected the negative impact of $1.00 per common share consisting of costs associated with Franklin Credit Management Corporation (“Franklin”), net market-related losses, merger costs, a Visa ® indemnification charge, and increases to litigation reserves on existing cases. |
| • | $88.7 million of provision for credit losses, down from $512.1 million in the 2007 fourth quarter. The current quarter included no Franklin-related provision for credit losses. In contrast, the 2007 fourth quarter total provision for credit losses of $512.1 million consisted of $405.8 million Franklin-related and $106.3 million non-Franklin related provision. Non-Franklin provision for credit losses decreased $17.7 million from $106.3 million to $88.7 million. This reflected the benefit of lower non-Franklin related commercial net charge-offs. | |
| • | 3.23% net interest margin, down from 3.26% in the 2007 fourth quarter. This reduction primarily reflected the asset-sensitive nature of our balance sheet with a more rapid downward repricing of loans compared with funding costs, primarily deposits, as interest rates declined throughout the 2008 first quarter. | |
| • | 6% annualized linked-quarter growth in average total commercial loans and a 1% annualized linked-quarter decline in average total consumer loans. | |
| • | 2% annualized linked-quarter decline in average total core deposits, primarily reflecting a seasonal decline in average non-interest bearing demand deposits. | |
| • | $65.2 million linked-quarter increase in total non-interest income, primarily reflecting the benefits of a decline in market related losses, the current quarter’s gain from the Visa ® IPO, growth in mortgage origination income, seasonal growth in insurance income, and an increase in automobile operating lease income, partially offset by current quarter seasonal declines in deposit and other service charges. | |
| • | $69.1 million linked-quarter decline in total non-interest expense. Excluding from both periods merger-related costs, the Visa ® indemnification impacts, and automobile operating lease expense, as well as asset impairment in the current quarter and the prior quarter’s increase to litigation reserves on existing cases, total non-interest expense increased. This increase was due primarily to higher seasonal expenses for payroll taxes, as well as increases in OREO and collection expenses, which more than offset the realization of 100% of the targeted $115 million annualized merger expense efficiencies. | |
| • | $11.1 million benefit to provision for income taxes, representing a reduction to the previously established capital loss carry-forward valuation allowance as a result of the 2008 first quarter Visa ® IPO. | |
| • | $48.4 million of net charge-offs, or 0.48% of average loans and leases. The current quarter included no Franklin-related net charge-offs. These results compare with $377.9 million, or 3.77%, in the 2007 fourth quarter, which included $308.5 million of Franklin-related and $69.4 million non-Franklin related net charge-offs. | |
| • | 1.53% period-end allowance for loan and lease losses (“ALLL”) ratio, up from 1.44% at the end of the fourth quarter. |
S-2
Table of Contents
| • | 1% increase in non-performing assets (“NPAs”) to $1.678 billion from $1.660 billion at the end of the fourth quarter, primarily reflecting: |
| • | An 18% increase in non-accrual loans (“NALs”) to $377.4 million from $319.8 million at the end of the fourth quarter, with most of the increase in middle market commercial real estate (“CRE”) loans, specifically the single family home builder segment. Period-end NALs represented 0.92% of total loans and leases, up from 0.80% at December 31, 2007. | |
| • | A 3% decline in the Franklin restructured loans, to $1.157 billion from $1.187 billion. While classified as NPAs, these loans are performing and continued to accrue interest. Importantly, first quarter cash flows exceeded that required by terms of the 2007 fourth quarter restructuring. |
| • | 7.55% and 10.86% period-end Tier 1 and Total risk-based capital ratios, both increased from 7.51% and 10.85%, respectively at December 31, 2007, and above the regulatory “well capitalized” minimums of 6.0% and 10.0%, respectively. The “well capitalized” level is the highest regulatory capital designation. |
See our Current Report on
Form 8-K
filed with the SEC on April 16, 2008, which is incorporated
herein by reference (except for the information furnished under
Item 2.02 thereof and the furnished portions of
Exhibit 99.1 thereto).
S-3
Table of Contents
The
Offering
| Issuer | Huntington Bancshares Incorporated, a Maryland corporation. | |
| Securities Offered | 500,000 shares of 8.50% Series A Non-Cumulative Perpetual Convertible Preferred Stock. In addition, we have granted the underwriters an option exercisable for 30 days after the date of this prospectus supplement to purchase up to 75,000 additional shares of Preferred Stock to the extent the underwriters sell more than 500,000 shares of Preferred Stock in this offering. | |
| Dividends | Dividends on the Preferred Stock will be payable quarterly in arrears, when, as and if authorized by our board of directors and declared by us out of legally available funds at an annual rate of 8.50% on the liquidation preference of $1,000 per share. | |
| Dividends on the Preferred Stock will be non-cumulative. If for any reason our board of directors does not authorize and we do not declare full cash dividends on the Preferred Stock for a quarterly dividend period, we will have no obligation to pay any dividends for that period, whether or not our board of directors authorizes and we declare dividends on the Preferred Stock for any subsequent dividend period. | ||
| Dividend Payment Dates | January 15, April 15, July 15 and October 15 of each year (or the following business day if such date is not a business day), commencing on July 15, 2008. | |
| Dividend Stopper | With certain limited exceptions, if we have not declared and paid or set aside for payment full quarterly dividends on the Preferred Stock for a particular dividend period, we may not declare or pay dividends on, or redeem, purchase or acquire, our common stock or other junior securities during the next succeeding dividend period. | |
| Redemption | The Preferred Stock is not redeemable by us at any time. | |
| Maturity | Perpetual. | |
| Conversion Right | Each share of the Preferred Stock may be converted at any time, at the option of the holder, into 83.6680 shares of our common stock (which reflects an approximate initial conversion price of $11.95 per share of our common stock) plus cash in lieu of fractional shares, subject to anti-dilution adjustments. | |
| If the conversion date is on or prior to the record date for any declared cash dividend on the Preferred Stock for the dividend period in which you elect to convert, you will not receive any declared cash dividends for that dividend period. If the conversion date is after the record date for any declared cash dividend on the Preferred Stock and prior to the corresponding dividend payment date, you will receive that cash dividend on the relevant dividend payment date if you were the holder of record on the record date for that dividend; however, whether or not you were the holder of record on the record date, if you convert after a record date and prior to the related dividend |
S-4
Table of Contents
| payment date, you must pay to the conversion agent when you convert your shares of the Preferred Stock an amount in cash equal to the full dividend actually paid on such dividend payment date on the shares being converted, unless your shares are being converted as a consequence of a mandatory conversion at our option, a make-whole acquisition or a fundamental change as described below. | ||
| Mandatory Conversion at Our Option | On or after April 15, 2013, we may, at our option, at any time or from time to time, cause some or all of the Preferred Stock to be converted into shares of our common stock at the then applicable conversion rate. We may exercise our conversion right if, for 20 trading days within any period of 30 consecutive trading days, including the last trading day of such period, ending on the trading day preceding the date we give notice of mandatory conversion, the closing price of our common stock exceeds 130% of the then applicable conversion price of the Preferred Stock. | |
| Conversion upon Certain Acquisitions | The following provisions will apply if one of the following events occur: | |
|
• a “person” or “group” within the
meaning of Section 13(d) of the Exchange Act files a
Schedule TO or any schedule, form or report under the
Exchange Act disclosing that such person or group has become the
direct or indirect ultimate “beneficial owner,” as
defined in
Rule 13d-3
under the Exchange Act, of our common stock representing more
than 50% of the voting power of our common stock; or |
||
|
• consummation of any consolidation or merger of us or
similar transaction or any sale, lease or other transfer in one
transaction or a series of transactions of all or substantially
all of the consolidated assets of us and our subsidiaries, taken
as a whole, to any person other than one of our subsidiaries, in
each case pursuant to which our common stock will be converted
into, or receive a distribution of the proceeds in, cash,
securities or other property, other than pursuant to a
transaction in which the persons that “beneficially
owned” (as defined in
Rule 13d-3
under the Exchange Act) directly or indirectly, voting shares
immediately prior to such transaction beneficially own, directly
or indirectly, voting shares representing a majority of the
total voting power of all outstanding classes of voting shares
of the continuing or surviving person immediately after the
transaction. |
||
| These transactions are referred to as “ make-whole acquisitions ”; except that a make-whole acquisition will not be deemed to have occurred if at least 90% of the consideration received by holders of our common stock in the transaction or transactions consists of shares of common stock or American Depositary Receipts in respect of common stock that is traded |
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| on a U.S. national securities exchange or that will be so traded when issued or exchanged. | ||
| Upon a make-whole acquisition, we will, under certain circumstances, be required to pay a make-whole adjustment in the form of an increase in the conversion rate upon any conversions of the Preferred Stock that occur during the period beginning on the effective date of the make-whole acquisition and ending on the date that is 30 days after the effective date as described herein. The make-whole adjustment will be payable in shares of our common stock or the consideration into which our common stock has been converted or exchanged in connection with the make-whole acquisition. | ||
| The amount of the make-whole adjustment, if any, will be based on the stock price and the effective date of the make-whole acquisition. A description of how the make-whole adjustment will be determined and a table showing the make-whole adjustment that would apply at various stock prices and effective dates is set forth under “Description of Preferred Stock — Conversion upon Fundamental Change.” | ||
|
Conversion upon Fundamental Change |
If the reference price (as defined under “Description of Preferred Stock — Conversion upon Fundamental Change”) in connection with a fundamental change (as defined under “Description of Preferred Stock — Conversion upon Fundamental Change”) is less than the applicable conversion price, each share of the Preferred Stock may be converted during the period beginning on the effective date of the fundamental change and ending on the date that is 30 days after the effective date of such fundamental change at an adjusted conversion price equal to the greater of (1) the reference price and (2) $4.98, which is 50% of the closing price of our common stock on the date of this prospectus supplement, subject to adjustment. If the reference price is less than $4.98, holders will receive a maximum of 200.8032 shares of our common stock per share of the Preferred Stock, subject to adjustment, which may result in a holder receiving value that is less than the liquidation preference of the Preferred Stock. In lieu of issuing common stock upon conversion in the event of a fundamental change, we may at our option, and if we obtain any necessary regulatory approval, make a cash payment equal to the reference price for each share of common stock otherwise issuable upon conversion. | |
| See “Description of Preferred Stock — Conversion upon Fundamental Change.” | ||
|
Reorganization Events (Including Mergers) |
The following provisions apply in the event of certain “reorganization events,” which include, subject to certain exceptions: | |
|
• any consolidation or merger of us with or into
another person in each case pursuant to which our common stock
will be converted into cash, securities or other property; |
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S-7
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| terms of which do not expressly provide that it ranks on a parity with or senior to the Preferred Stock as to dividend rights and rights on liquidation, winding-up and dissolution of Huntington Bancshares Incorporated. The Preferred Stock will rank on a parity with each class or series of preferred stock we may issue in the future the terms of which expressly provide that such class or series will rank on a parity with the Preferred Stock as to dividend rights and rights on liquidation, winding up and dissolution of Huntington Bancshares Incorporated. | ||
| Preemptive Rights | None. | |
| Use of Proceeds | We expect to receive net proceeds from the offering of the Preferred Stock of approximately $482.5 million (or approximately $555.25 million, if the underwriters exercise their option to purchase additional shares of Preferred Stock in full), after underwriting commissions and expenses. We intend to use the net proceeds of the offering of the Preferred Stock for general corporate purposes, including to increase our liquidity and to increase our capital. The precise amounts and timing of the application of proceeds will depend on the requirements of Huntington and its subsidiaries and affiliates. See “Use of Proceeds.” | |
|
Certain U.S. Federal Income Tax Considerations |
For a discussion of certain U.S. federal income tax considerations of purchasing, owning, converting and disposing of the Preferred Stock and of owning and disposing of our common stock received in respect thereof, see “Certain U.S. Federal Income Tax Considerations.” Dividends received by non-corporate U.S. Holders, including individuals, in taxable years beginning before January 1, 2011 generally will be subject to reduced rates of taxation, subject to certain conditions and limitations. Dividends paid to corporate U.S. Holders generally should be eligible for the dividends-received deduction, subject to certain conditions and limitations. Dividends paid to Non-U.S. Holders generally should be subject to U.S. federal withholding tax at a 30% rate, unless such rate is reduced by an applicable tax treaty. | |
| Risk Factors | For a discussion of risks and uncertainties involved with an investment in our Preferred Stock and our common stock, see “Risk Factors” beginning on page S-7 of this prospectus supplement and “Risk Factors” beginning on page 10 of our Annual Report on Form 10-K for the year ended December 31, 2007. |
Unless otherwise stated, all information contained in this
prospectus supplement assumes that the underwriters do not
exercise their option to purchase up to an aggregate of
75,000 additional shares of the Preferred Stock.
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RISK
FACTORS
An investment in the Preferred Stock is subject to certain
risks. You should carefully review the following risk factors
and other information contained in this prospectus supplement
and in documents incorporated by reference in the accompanying
prospectus before deciding whether this investment is suited to
your particular circumstances.
Risks Relating to
Huntington
Our businesses are subject to a variety of credit, market,
liquidity and operational risks that investors should carefully
consider in connection with a possible investment in the
Preferred Stock.
Under the caption “Risk Factors” in our Annual Report
on
Form 10-K
for the year ended December 31, 2007, we have described a
number of important factors that could materially impact our
business, future results of operations and future cash flows.
They include the following:
—
Credit Risks:
| • | The largest single contributor to our net loss in the fourth quarter of 2007, and our reduced net income in 2007 as compared to 2006, was $405.8 million in charge-offs and special reserves relating to our credit relationship with Franklin Credit Management Corporation (“ Franklin ”). There can be no assurance that we will not incur further losses relating to the Franklin relationship. | |
| • | Our commercial real estate loan portfolio has and will continue to be affected by the on-going correction in residential real estate prices and reduced levels of home sales. At March 31, 2008, we had $9.5 billion of commercial real estate loans, including $1.7 billion of loans to builders of single family homes. There has been a general slowdown in the housing market across our geographic footprint, reflecting declining prices and excess inventories of houses to be sold, particularly impacting borrowers in our eastern Michigan and northern Ohio markets. As a result, home builders have shown signs of financial deterioration. | |
| • | Declines in home values and reduced levels of home sales in our markets could continue to adversely affect us. Continuing declines in home values are likely to lead to higher charge-offs and delinquencies in each of our residential-related real estate loan portfolios as compared to the pre-July 2007 historical levels. | |
| • | The allowance for loan losses may prove inadequate or be negatively affected by credit risk exposures. |
—
Market Risks:
| • | Changes in interest rates could negatively impact our financial condition and results of operations. |
—
Liquidity Risk:
| • | If Huntington or the Bank were unable to borrow funds through access to capital markets, we may not be able to meet the cash flow requirements of our depositors and borrowers, or the operating cash needs to fund corporate expansion and other corporate activities. | |
| • | If our credit ratings were downgraded, the ability to access funding sources may be negatively impacted or eliminated, and our liquidity and the market price of our common stock could be adversely impacted. The Bank has issued letters of credit that support $812 million at December 31, 2007 of notes and bonds issued by our customers. The majority of the bonds have been sold by The Huntington Investment Company, our broker-dealer subsidiary. A downgrade in the Bank’s short term rating might influence some of the bond investors to put |
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| the bonds back to the remarketing agent. A failure to remarket would require the Bank to obtain funding for the amount of notes and bonds that cannot be remarketed. |
| • | The Office of the Comptroller of the Currency (“ OCC ”) may impose dividend payment and other restrictions on the Bank, which could impact our ability to service our debt and to pay dividends to stockholders or repurchase stock. Due to the significant loss that the Bank incurred in the fourth quarter of 2007, at March 31, 2008, the Bank could not declare and pay dividends to the holding company without regulatory approval. We do not anticipate that we will receive dividends from the Bank until the second half of 2008. |
—
Operational Risks:
| • | The resolution of significant pending litigation, if unfavorable, could have a material adverse effect on our results of operations for a particular period. | |
| • | Huntington faces significant operational risk, including reputational risk, legal and compliance risk, the risk of fraud or theft by employees or outsiders, unauthorized transactions by employees or operational errors, including clerical or record-keeping errors or those resulting from faulty or disabled computer or telecommunications systems. Negative public opinion can result from Huntington’s actual or alleged conduct in any number of activities, including lending practices, corporate governance and acquisitions and from actions taken by government regulators and community organizations in response to those activities. Negative public opinion can adversely affect Huntington’s ability to attract and keep customers and can expose it to litigation and regulatory action. |
Investors should review and carefully consider the more complete
discussion of these factors in our Annual Report or
Form 10-K
for the year ended December 31, 2007 and any subsequent
reports we filed with the SEC, which are incorporated by
reference in this prospectus supplement.
Risks Relating to
the Offering
The Preferred Stock is equity and is subordinate to all of
our existing and future indebtedness, and our ability to declare
dividends on the Preferred Stock may be limited.
Shares of the Preferred Stock are equity interests in Huntington
and do not constitute indebtedness. As such, shares of the
Preferred Stock will rank junior to all indebtedness and other
non-equity claims on Huntington with respect to assets available
to satisfy claims on Huntington, including in a liquidation of
Huntington. Additionally, unlike indebtedness, where principal
and interest would customarily be payable on specified due
dates, in the case of preferred stock like the Preferred Stock
(1) dividends are payable only when, as and if authorized
by our board of directors and declared by us and (2) as a
corporation, we are subject to restrictions on payments of
dividends and the redemption price out of lawfully available
funds.
Also, as a bank holding company, Huntington’s ability to
declare and pay dividends is dependent on certain federal
regulatory considerations. Huntington is an entity separate and
distinct from its principal subsidiary, the Bank, and depends
upon dividends from the Bank to meet its obligations to pay the
principal of and interest on its outstanding debt obligations
and corporate expenses. Huntington has issued and outstanding
debt securities under which we may defer interest payments from
time to time, but in that case we would not be permitted to pay
dividends on any of our capital stock, including the Preferred
Stock, during the deferral period. See “Regulatory
Considerations.”
Dividends on the Preferred Stock are
non-cumulative.
Dividends on the Preferred Stock are non-cumulative.
Consequently, if our board of directors does not authorize and
we do not declare a dividend for any dividend period, holders of
the Preferred Stock will not be entitled to receive a dividend
for such period, and such undeclared dividend will not accrue
and be payable. We will have no obligation to pay dividends for
a dividend period after the
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dividend payment date for such period if our board of directors
does not authorize and we have not declared such dividend before
the related dividend payment date, whether or not dividends are
authorized and declared for any subsequent dividend period with
respect to the Preferred Stock. Our board of directors may
determine that it would be in our best interest to pay less than
the full amount of the stated dividends on the Preferred Stock
or no dividend for any quarter even if funds are available.
Factors that would be considered by our board of directors in
making this determination are our financial condition and
capital needs, the impact of current and pending legislation and
regulations, economic conditions, tax considerations, and such
other factors as our board of directors may deem relevant.
The market price of the Preferred Stock will be directly
affected by the market price of our common stock, which may be
volatile.
To the extent that a secondary market for the Preferred Stock
develops, we believe that the market price of the Preferred
Stock will be significantly affected by the market price of our
common stock. We cannot predict how the shares of our common
stock will trade in the future. This may result in greater
volatility in the market price of the Preferred Stock than would
be expected for nonconvertible preferred stock. From
January 1, 2005 to April 15, 2008, the reported high
and low sales prices for our common stock ranged from a low of
$9.64 per share to a high of $25.41 per share. The market price
of our common stock will likely continue to fluctuate in
response to a number of factors including the following, most of
which are beyond our control:
| • | actual or anticipated quarterly fluctuations in our operating and financial results; | |
| • | developments related to investigations, proceedings or litigation that involve us; | |
| • | changes in financial estimates and recommendations by financial analysts; | |
| • | dispositions, acquisitions and financings; | |
| • | actions of our current stockholders, including sales of common stock by existing stockholders and our directors and executive officers; | |
| • | changes in the ratings of our other securities; | |
| • | fluctuations in the stock price and operating results of our competitors; | |
| • | regulatory developments; and | |
| • | developments related to the financial services industry. |
The market price of our common stock may also be affected by
market conditions affecting the stock markets in general,
including price and trading fluctuations on the NASDAQ Global
Select Market. These conditions may result in
(i) volatility in the level of, and fluctuations in, the
market prices of stocks generally and, in turn, our common stock
and (ii) sales of substantial amounts of our common stock
in the market, in each case that could be unrelated or
disproportionate to changes in our operating performance. These
broad market fluctuations may adversely affect the market prices
of our common stock, and, in turn, the Preferred Stock.
In addition, we expect that the market price of the Preferred
Stock will be influenced by yield and interest rates in the
capital markets, our creditworthiness and the occurrence of
events affecting us that do not require an adjustment to the
conversion rate.
There may be future sales or other dilution of our equity,
which may adversely affect the market price of our common stock
or the Preferred Stock.
Except as described under “Underwriting —
Lock-Up
Agreements,” we are not restricted from issuing additional
common stock or preferred stock, including any securities that
are convertible into or exchangeable for, or that represent the
right to receive, common stock or preferred stock or any
substantially similar securities. The market price of our common
stock or preferred stock could decline
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as a result of sales of a large number of shares of common stock
or preferred stock or similar securities in the market after
this offering or the perception that such sales could occur.
Each share of Preferred Stock will be convertible at the option
of the holder thereof into 83.6680 shares of our common
stock, subject to anti-dilution adjustments. The conversion of
some or all of the Preferred Stock will dilute the ownership
interest of our existing common stockholders. Any sales in the
public market of our common stock issuable upon such conversion
could adversely affect prevailing market prices of the
outstanding shares of our common stock and the Preferred Stock.
In addition, the existence of our Preferred Stock may encourage
short selling or arbitrage trading activity by market
participants because the conversion of our Preferred Stock could
depress the price of our equity securities.
The issuance of additional preferred shares could
adversely affect holders of common stock, which may negatively
impact your investment.
Our board of directors is authorized to cause us to issue
additional classes or series of preferred shares without any
action on the part of the stockholders. The board of directors
also has the power, without stockholder approval, to set the
terms of any such classes or series of preferred shares that may
be issued, including voting rights, dividend rights and
preferences over the common stock with respect to dividends or
upon the liquidation, dissolution or winding up of our business
and other terms. If we issue preferred shares in the future that
have a preference over the common stock with respect to the
payment of dividends or upon liquidation, dissolution or winding
up, or if we issue preferred shares with voting rights that
dilute the voting power of the common stock, the rights of
holders of the common stock or the market price of the common
stock could be adversely affected. As noted above, a decline in
the market price of the common stock may negatively impact the
market price for the Preferred Stock.
Holders of the Preferred Stock will have no rights as
holders of common stock until they acquire the common
stock.
Until the conversion of your Preferred Stock into common stock,
you will have no rights with respect to the common stock,
including voting rights (except as described under
“Description of Preferred Stock — Voting
Rights”), rights to respond to tender offers and rights to
receive any dividends or other distributions on the common
stock, but your investment in the Preferred Stock may be
negatively affected by these events. Upon conversion, you will
be entitled to exercise the rights of a holder of common stock
only as to matters for which the record date occurs on or after
the applicable conversion date. For example, in the event that
an amendment is proposed to our charter or bylaws requiring
stockholder approval and the record date for determining the
stockholders of record entitled to vote on the amendment occurs
prior to the conversion date, you will not be entitled to vote
on the amendment, although you will nevertheless be subject to
any changes in the powers, preferences or special rights of our
common stock that may occur as a result of such amendment.
You will have limited voting rights.
Until and unless we are in arrears on our dividend payments on
the Preferred Stock for six dividend periods, whether
consecutive or not, you will have no voting rights except with
respect to certain fundamental changes in the terms of the
Preferred Stock and certain other matters. If dividends on the
Preferred Stock are not paid in full for six dividend periods,
whether consecutive or not, the holders of Preferred Stock,
acting as a class with any other parity securities having
similar voting rights, will have the right to elect