Huntington National Bank 2012 Annual Report Download - page 106

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or proceedings, and the opinions and views of legal counsel. Litigation exposure represents a key area of judgment and is subject to
uncertainty and certain factors outside of our control.
Income Taxes
The calculation of our provision for income taxes is complex and requires the use of estimates and judgments. We have two
accruals for income taxes: (1) our income tax payable represents the estimated net amount currently due to the federal, state, and local
taxing jurisdictions, net of any reserve for potential audit issues, and is reported as a component of accrued income and other assets in
our consolidated balance sheet; (2) our deferred federal and state income tax and related valuation accounts, reported as a component
of accrued income and other assets, represents the estimated impact of temporary differences between how we recognize our assets
and liabilities under GAAP, and how such assets and liabilities are recognized under federal and state tax law.
In the ordinary course of business, we operate in various taxing jurisdictions and are subject to income and non-income taxes. The
effective tax rate is based in part on our interpretation of the relevant current tax laws. We believe the aggregate liabilities related to
taxes are appropriately reflected in the consolidated financial statements. We review the appropriate tax treatment of all transactions
taking into consideration statutory, judicial, and regulatory guidance in the context of our tax positions. In addition, we rely on various
tax opinions, recent tax audits, and historical experience.
From time-to-time, we engage in business transactions that may affect our tax liabilities. Where appropriate, we have obtained
opinions of outside experts and have assessed the relative merits and risks of the appropriate tax treatment of business transactions
taking into account statutory, judicial, and regulatory guidance in the context of the tax position. However, changes to our estimates of
accrued taxes can occur due to changes in tax rates, implementation of new business strategies, resolution of issues with taxing
authorities regarding previously taken tax positions, and newly enacted statutory, judicial, and regulatory guidance. Such changes
could affect the amount of our accrued taxes and could be material to our financial position and / or results of operations. (See Note 17
of the Notes to Consolidated Financial Statements.)
Deferred Tax Assets
At December 31, 2012, we had a net federal deferred tax asset of $171.5 million and a net state deferred tax asset of $32.4
million. A valuation allowance is provided when it is more-likely-than-not that some portion of the deferred tax asset will not be
realized. All available evidence, both positive and negative, was considered to determine whether, based on the weight of that
evidence, impairment should be recognized. Our forecast process includes judgmental and quantitative elements that may be subject to
significant change. If our forecast of taxable income within the carryforward periods available under applicable law is not sufficient to
cover the amount of net deferred tax assets, such assets may be impaired. Based on our analysis of both positive and negative evidence
and our ability to offset the net deferred tax assets against our forecasted future taxable income, there was no impairment of the net
deferred tax assets at December 31, 2012.
Recent Accounting Pronouncements and Developments
Note 2 to Consolidated Financial Statements discusses new accounting pronouncements adopted during 2012 and the expected
impact of accounting pronouncements recently issued but not yet required to be adopted. To the extent the adoption of new
accounting standards materially affect financial condition, results of operations, or liquidity, the impacts are discussed in the
applicable section of this MD&A and the Notes to Consolidated Financial Statements.
Item 7A: Quantitative and Qualitative Disclosures About Market Risk
Information required by this item is set forth under the heading of “Market Risk” in Item 7 (MD&A), which is incorporated
by reference into this item.
Item 8: Financial Statements and Supplementary Data
Information required by this item is set forth in the Report of Independent Registered Public Accounting Firm, Consolidated
Financial Statements and Notes, and Selected Quarterly Income Statements, which is incorporated by reference into this item.