Huntington National Bank 2003 Annual Report Download - page 127

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. Restructuring Reserves
In 2002 and 2001, Huntington reserved $49.0 million and $80.0 million, respectively, for the implementation of the 2001 strategic
refocusing plan. The strategic refocusing plan included the sale of Huntington’s banking and insurance operations in Florida, the
consolidation of certain banking offices, and other actions to strengthen Huntington’s balance sheet and financial performance. The
1998 reserve was established for, among other items, the exit from under-performing product lines, including possible third party
claims related to these exits. During 2003, Huntington released $6.7 million of restructuring reserves through a credit to the
restructuring charges line of non-interest expense in the accompanying consolidated income statement. Released reserves of $3.8
million related to those established in 1998 and $2.9 million related to the strategic refocusing plan established in 2001. On a quarterly
basis, Huntington assesses its remaining restructuring reserves and makes adjustments to those reserves as necessary. As of December
31, 2003, Huntington had remaining reserves for restructuring of $13.6 million. Huntington expects that the reserves will be adequate
to fund the estimated cash outlays necessary to complete the exit activities.
22. Divestitures
On July 25, 2003, Huntington sold four banking offices located in eastern West Virginia. This sale included approximately $50 million
of loans and $130 million of deposits. Huntington’s pre-tax gain from this sale was $13.1 million in the third quarter of 2003 and is
reflected as a separate component of non-interest income.
On July 18, 2002, Huntington announced the restructuring of its investment in Huntington Merchant Services LLC, the company’s
merchant services business. Huntington sold its Florida-related merchant business and decreased its equity investment in Huntington
Merchant Services. As a result of the transaction, Huntington recorded a gain of $24.6 million.
On July 2, 2002, Huntington completed the sale of its Florida insurance operations to members of The J. Rolfe Davis Insurance Agency,
Inc. management. Though the sale affected selected non-interest income and non-interest expense categories, it had no material gain
or impact on net income.
On February 15, 2002, Huntington completed the sale of its Florida operations to SunTrust Banks, Inc. Included in the sale were $4.8
billion of deposits and other liabilities and $2.8 billion of loans and other assets. Huntington received a deposit premium of 15%, or
$711.9 million. The total net pre-tax gain from the sale was $182.5 million and is reflected in non-interest income. The after-tax gain
was $61.4 million, or $0.25 per share. Income taxes related to this transaction were $121.0 million, an amount higher than the tax
impact at the statutory rate of 35%, because most of the goodwill relating to the Florida operations was non-deductible for tax
purposes. At December 31, 2003, Huntington had a contingency reserve of $1.6 million related to the sale of its Florida banking and
insurance operations. Huntington expects that this contingency reserve will be adequate to fund estimated future cash outlays.
HUNTINGTON BANCSHARES INCORPORATED 125