Huntington National Bank 2011 Annual Report Download - page 127

Due to the current economic environment and other uncertainties, it is possible that our estimates and
assumptions may adversely change in the future. If our market capitalization decreases, we may be required to
record goodwill impairment losses in future periods, whether in connection with our next annual impairment
testing or prior to that time, if any changes constitute a triggering event.
The 2010 and 2009 interim and annual assessments discussed below were performed in a manner consistent
with the 2011 process described above. The assessments were based on our reporting units at that time.
2010 Annual Impairment Testing and Interim Evaluations
In 2010, we performed an annual assessment at October 1 and interim evaluations of our goodwill balances
at March 31 and June 30. No impairment was recorded in 2010.
2009 Other Interim and Annual Impairment Testing
During the 2009 first quarter, our stock price declined 78%, from $7.66 per common share at December 31,
2008, to $1.66 per common share at March 31, 2009. Many peer banks also experienced similar significant
declines in market capitalization during this same period. This decline primarily reflected the continuing
economic slowdown and increased market concern surrounding financial institutions’ credit risks and capital
positions, as well as uncertainty related to increased regulatory supervision and intervention. We determined that
these changes would more-likely-than-not reduce the fair value of certain reporting units below their carrying
amounts. Therefore, we performed an interim goodwill impairment test during the 2009 first quarter.
Our 2009 first quarter interim testing determined that the Regional Banking and Insurance reporting units’
goodwill carrying values exceeded their implied fair values of goodwill by $2,573.8 million and $28.9 million,
respectively. As a result, we recorded a noncash pretax impairment charge of $2,602.7 million in the 2009 first
quarter. In addition, we recorded an impairment charge of $4.2 million in the 2009 second quarter related to the
sale of a small payments-related business completed in July 2009. No other goodwill impairment was required
during the remainder of 2009.
PENSION
Pension plan assets consist of mutual funds and our common stock. Investments are accounted for at cost on
the trade date and are reported at fair value. Mutual funds are valued at quoted Net Asset Value. Our common
stock is traded on a national securities exchange and is valued at the last reported sales price.
The discount rate and expected return on plan assets used to determine the benefit obligation and pension
expense are both assumptions. Actual results may be materially different. (See Note 18 of the Notes to the
Consolidated Financial Statements).
OTHER REAL ESTATE OWNED
OREO property obtained in satisfaction of a loan is recorded at its estimated fair value less anticipated
selling costs based upon the property’s appraised value at the date of transfer, with any difference between the
fair value of the property and the carrying value of the loan charged to the ALLL. Subsequent declines in value
are reported as adjustments to the carrying amount and are charged to noninterest expense. Gains or losses
resulting from the sale of OREO are recognized in noninterest expense on the date of sale. At December 31,
2011, OREO totaled $38.4 million, representing a 42% decrease compared with $66.8 million at December 31,
2010.
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